Financial Action Task Force (FATF)

Context: Pakistan has resorted to its usual tactic of some high-profile actions in the run-up to the FATF plenary to create the impression that it was delivering on its counter-terror financing commitments. 

It is again looking to China, Malaysia and Turkey to help it get off lightly for failing to fully implement an action plan to tackle terror funding when the Financial Action Task Force (FATF) assesses its case in October.

Ahead of FATF’s working group and plenary meetings between October 18 and 23, the Asia-Pacific Group (APG), a regional affiliate of the multilateral watchdog, reviewed Pakistan’s actions to counter-terror financing and money laundering at a virtual meeting on September 15 and 16.

Pakistan is unlikely to be moved from FATF’s grey list to the black list, despite mounting frustration among the watchdog’s members over its repeated failure to deliver on the action plan.

At the virtual meeting, China expectedly backed Pakistan’s actions to counter-terror financing, despite the fact that it is yet to fully deliver on 13 of the 27 points in the action plan, and that it has only complied with 14 of those points.

When Yao Jing, China’s outgoing ambassador to Pakistan, made a farewell call on the de facto finance minister Abdul Hafeez Shaikh in Islamabad on September 17 – a day after the APG meeting – he was quoted in an official statement as expressing “his confidence that FATF’s October review will go well for Pakistan”.

Ahead of the FATF plenary meeting, Pakistan will have to submit a progress report by September 30.

Recently, India has attended the virtual 32nd special Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) plenary meeting, under the aegis of the Financial Action Task Force.

Officials of National Investigation Agency (NIA), Enforcement agencies also submitted details on terror-funding.

Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG)

• It is a regional body comprising 9 countries: India, Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan and Belarus.
  
  
• It is an associate member of the FATF.

Financial Action Task Force (FATF)

• The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 during the G7 Summit in Paris.
  
  
• The objectives of the FATF are 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.
  
  
• Its Secretariat is located at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris.
  
  
• Member Countries: it consists of 37 member jurisdictions.
  
  
• India is one of the members.

FATF has 2 lists:

Grey List (formally called the "Other monitored jurisdictions"): Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.

Black List (formally called the "Call for action"): Countries known as Non-Cooperative Countries or Territories (NCCTs) are put in the blacklist. These countries support terror funding and money laundering activities. The FATF revises the blacklist regularly, adding or deleting entries.

The FATF Plenary is the decision making body of the FATF. It meets three times per year.

FATF - Key Points:

FATF’s view on crime amid Covid-19:

The FATF which is actively monitoring the impact of the pandemic on measures to combat illicit financing, released a paper on “Covid-19-related Money Laundering and Terrorist Financing Risks and Policy Responses”.

It observed an increase in the Covid-19 related crimes, including fraud, cyber-crime, misdirection or exploitation of government funds or international finance assistance.

India and FATF:

Ahead of the crucial meet on 24th June, India plans to share more evidence with the key FATF members on the narco-terror cases linked to Pakistan-based syndicates, through which funds are allegedly being supplied to the terrorists operating in Jammu and Kashmir.

The Enforcement Directorate and the National Investigation Agency have been probing several such cases.

Status of Pakistan:

Pakistan, which continues to remain on the “grey list” of FATF, had earlier been given the deadline till the June 2020 to ensure compliance with the 27-point action plan against terror funding networks and money laundering syndicates, or face “black listing”.

However, owing to the Covid-19 pandemic, the deadline has been shifted to October 2020.

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