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Financial Action Task Force (FATF)

Topics Covered:

  1. Security challenges and their management in border areas; linkages of organized crime with terrorism.


Financial Action Task Force (FATF)


What to study?

For Prelims: FATF, Grey list, G7, About APG.

For Mains: What is Grey list and Black list, how are countries in the list affected? How does FATF’s latest move affects Pakistan?


Context: The Asia – Pacific Group of FATF (Financial Action Task Force) has slammed Pakistan for failing to take actions against terror groups.


Pakistan and state-sponsored terrorism:

  • Pakistan has been accused by neighbouring countries India, Afghanistan and Iran and other nations, such as the United States, the United Kingdom, and France of involvement in terrorist activities in the region and beyond.
  • It is also alleged that Money is transferred to terror organization via Pakistan army.
  • It has been described as a safe haven for terrorists by western media and the United States Defense Secretary. It has been time and again proved that Pakistan has been supportive to several terrorist groups despite several stern warnings from the international community
  • Besides, the government of Pakistan has been accused of aiding terrorist organisations operating on their soil who have attacked neighbouring India.

However, Pakistan denies all allegations, stating that these acts are committed by non-state actors.


About FATF:

What is it? The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 on the initiative of the G7.  It is a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in various areas. The FATF Secretariat is housed at the OECD headquarters in Paris.

Objectives: 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.

Functions: The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures and promotes the adoption and implementation of appropriate measures globally.  In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.


The importance of combating terrorist financing:

  • Terrorists need money and other assets, for weapons but also training, travel and accommodation to plan and execute their attacks and develop as an organisation.
  • Disrupting and preventing these terrorism-related financial flows and transactions is one of the most effective ways to fight terrorism.
  • Not only can it prevent future attacks by disrupting their material support, the footprints of their purchases, withdrawals and other financial transactions can provide valuable information for ongoing investigations.
  • Countering terrorism financing is therefore an essential part of the global fight against terror threat.
  • As terrorists and terrorist groups continue to raise money with use of various means, countries must make it a priority to understand the risks they face from terrorist financing and develop policy responses to all aspects of it.


Sources: the Hindu.