UPSC GS Notes: Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) is an inter-governmental organisation established to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. It was formed in 1989 by the G7 Summit which was held in Paris. The FATF is really a policy-making body that works with governments to bring about national legislation and regulatory reforms in these areas.

FATF Recommendations

The FATF has developed a series of recommendations that have become global standards for fighting money laundering and terror financing, as well as the proliferation of weapons of mass destruction. The first set of recommendations was issued in 1990 followed by revisions in 1996, 2001, 2003 and lastly in 2012.

FATF Activities

The organisation monitors its member countries on the progress they have made in implementing reform measures, and reviews their counter-measures to money laundering and terror financing.

The decision-making body of FATF is called the FATF Plenary. It meets three times annually.

The organisation included combating terror financing among its objectives after the September 11 terror attacks on the USA in 2001.

FATF Blacklist

Officially called the “Non-Cooperative Countries or Territories (NCCTs), the FATF Blacklist is a list of countries which the FATF considers to be non-cooperative in the international fight against terrorist financing and money laundering. This list is regularly updated, with countries being either deleted off the list of new countries being added to the list. It is to be noted that some names are on the list not because of their non-cooperative stance towards fighting this menace, but because they lack the necessary infrastructure and mechanisms to engage in this fight.

FATF Countries (FATF Members)

Currently, there are 38 member countries in the FATF. India is a member of the organisation since June 2010. It had earlier acquired ‘Observer’ status at FATF in 2006.

FATF Observers are two in number, namely, Saudi Arabia and Indonesia. There are many other Observer organisations and Associate Members.

FATF President

The current President of the organisation is Xiangmin Liu of the People’s Republic of China. Its Executive Secretary is David Lewis of the United Kingdom.

The FATF is an important international organisation that is to be understood and studied for the IAS exam. International organisations are an important segment of IR for the UPSC exam. It is also a part of internal security, which is a part of General Studies II in the UPSC syllabus.

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