- Pakistan government has decided to hold a new session of the National Assembly and the Senate on September 14 and 15 respectively
- To pass important bills, including one related money laundering and terrorist financing, which was earlier rejected by the upper house of Parliament.
- The FATF-related money laundering and terrorist financial bill and other bills would be tabled before the two houses for fresh legislation.
- The Paris based Financial Action Task Force (FATF) put Pakistan on the grey list in June 2018 and asked Islamabad to implement a plan of action by the end of 2019 but the deadline was extended later due to COVID-19 pandemic.
- The government was considering referring the Anti-Money Laundering (Second Amendment) Bill and the Islamabad Capital Territory Waqf Properties Bill — both rejected by the Senate — to the joint sitting of Parliament.
- The 104-member Opposition-dominated Senate had rejected the two bills on August 25 through a voice vote.
- With Pakistan’s continuation in the ‘grey list’, it will be difficult for the country to get financial aid from the IMF, World Bank, ADB and the European Union, thus further enhancing problems for the nation which is in a precarious financial situation.
- If Pakistan fails to comply with the FATF directive by October, there is every possibility that the global body may put the country in the ‘Black List’ along with North Korea and Iran.
- The FATF is an inter-governmental body established in 1989 to combat money laundering, terrorist financing and other related threats to the integrity of the international financial system.
WHAT IS FATF
- The Financial Action Task Force (FATF) is an inter-governmental body decision-making body.
- It was established in 1989 during the G7 Summit in Paris to develop policies against money laundering.
- It is a “policy-making body” which works to generate the political will to bring about national legislative and regulatory reforms in money laundering.
- It has also started dealing with virtual currencies.
- The FATF Secretariat is located in Paris.
What is the objective of FATF?
- FATF sets standards and promotes effective implementation of:
- legal, regulatory and operational measures for combating money laundering.
- The FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.
How many members are there in FATF?
- As of 2019, FATF consists of thirty-seven member jurisdictions.
Is India a member of the Financial Action Task Force?
- India became an Observer at FATF in 2006. Since then, it had been working towards full-fledged membership.
- On June 25, 2010 India was taken in as the 34th country member of FATF.
FATF on terror financing
- FATF’s role in combating terror financing became prominent after the 9/11 terror attacks in the US.
- In 2001 its mandate expanded to include terrorism financing.
- Financing of terrorism involves providing money or financial support to terrorists.
- As of 2019, FATF has blacklisted North Korea and Iran over terror financing.
- Twelve countries are in the grey list, namely: Bahamas, Botswana, Cambodia, Ethiopia, Ghana, Pakistan, Panama, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen.
What as FATF ‘grey list’ and ‘blacklist’?
FATF has 2 types of lists:
- Black List: Countries knowns 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.
- Grey List: 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.