Full Form of FATF, What is FATF

The FATF stands for Financial Action Task Force, is an intergovernmental body founded in 1989 that creates and promotes standards and policies to combat money laundering and financing of terrorism.  

Various recommendations are created by the Financial Action Task Force to fight money laundering, terrorism funding, and other threats to the financial system. The headquarter of FATF is in Paris.

FATF is known as the "policy-making body" that aims to create the necessary political will to implement national legislative and regulatory reforms. 

Since 2000, they keep two types of lists i.e blacklist (previously called the "Call for action") and the greylist (previously known as "Other monitored jurisdictions").

History of FATF

The FATF was established by the 1989 G7 Summit in Paris to fight the money laundering problem. The duty of the task force is to check the trends of money laundering and monitor legislative, law enforcement, and financial activities at national and international levels. 

They were responsible to report any compliance and prescribe standards and suggestions to prevent money laundering.  However, the FATF included 16 members during the formation. It was increased to 39 members by 2021. 

In the first year, FATF shared a report that included forty recommendations to prevent money laundering effectively. Again, these policies were updated in 2003 to indicate the updated pattern in money laundering. In 2001, the FATF mandate expanded to include terrorist financing after the 9/11 terror attacks.

What are FATF Grey List & Black List

• Black List: It was formally called the "Call for action". The countries are described as the Non-Cooperative Countries or Territories (NCCTs). These countries are identified as the supporter of terrorism financing and money laundering actions. The blacklist is updated regularly, adding or deleting the countries.
• Grey List: It was previously named as the "Other monitored jurisdictions". Those countries which do not support terrorism financing and money laundering are placed on this list.

Objectives of FATF

The main objective of FATF is to establish standards and promote policies to implement:

• Legal, regulatory and operational actions to prevent money laundering, terrorist financing, and other issues. 
• Determine national-level threats with the aim to protect the integrity of the international financial system.

Recommendations of FATF

• A total of 40 Recommendations on Money Laundering and 8 (now 9) Special Recommendations on Terrorism Funding were made. 
• The purpose was to establish the international standard for anti-money laundering activities and fight terrorism financing and terrorist actions. 
• As of 2012, the recommendations were expanded to the new rules including mass destruction of weapons, corruption, and wire transfers. 
• In 2019, the FATF published its first guidance on a risk-based approach to virtual assets and their service providers. Their guidance includes recommendations on cryptocurrency businesses, placing anti-money laundering, etc. However, this guidance was updated in 2021. 

Members of FATF

• In 2021, there were 37 countries as full members of FATF. Their network contains a total of 187 countries in total as of 2012. They work with numerous international and regional organizations closely.
• In 2022, the FATF includes 37 member jurisdictions and 2 regional organizations indicating most major financial centers in the world.

[wp-faq-schema title=" Full Form of FATF FAQs" accordion=1]