FATF Blacklists and Greylists

Overview Financial Action Task Force (FATF)


The Financial Action Task Force (FATF), established by the G7 summit in Paris in July 1989, is a global money laundering and terrorist financing observer. FATF sets international standards to prevent illegal activities and harm to society. More than 200 countries and jurisdictions follow FATF's recommendations. The main purpose of FATF AML Standards is to prevent organized crime, illegal drugs, human trafficking, corruption, and terrorism. FATF is also working to stop funds for weapons of mass destruction. The Financial Action Task Force (FATF) advises countries to tackle financial crime, reviews members' policies and procedures.


FATF reviews techniques of money laundering and terrorist financing and continually strengthens its standards to address new risks as cryptocurrencies gain popularity. FATF countries are monitoring to ensure that they implement FATF Standards fully and effectively. FATF conducts its activities through General Assembly meetings and meetings held by working groups formed to work on various topics. FATF holds three General Assembly meetings every year. These meetings are usually held every year in October, February, and June.


Financial Action Task Force (FATF) Members


The country that can be a member of FATF must be considered strategically important, that is, it must have a large population and a large GDP. FATF currently has a total of 39 members, 37 countries, and 2 regional organizations. Members of FATF are Iceland, Argentina, Australia, Belgium, Austria, European Commission, Brazil, Canada, Denmark, Hong Kong, Finland, France, Germany, Malaysia, Greece, Gulf Co-operation Council, China, India, Switzerland, Ireland, Israel, Italy, Republic of Korea, Luxembourg, Singapore, Mexico, Japan, Netherlands, United Kingdom, Kingdom of, New Zealand, Norway, Portugal, Russian Federation, Saudi Arabia, South Africa, Spain, Sweden, Turkey, United States. A member country should approve and support the latest FATF recommendations and work with FATF in developing future recommendations. Besides, many international organizations participate in FATF as observers, and each of them engages in anti-money laundering activities.


What is FATF Blacklist?


FATF blacklists identify countries that are considered inadequate in money laundering and counter-financing of terrorism regimes. For all countries identified as high risk, FATF calls all members and encourages all jurisdictions to take due care, and, in the most serious cases, countries are called upon to take countermeasures to protect the international financial system from continuing. This also called FATF AML deficient list. A blacklisted country may be subject to economic sanctions by a member of FATF. As an example, we can see sanctions against Korea and Iran. Member countries may be added to the blacklist if the AML and CFT regulation regimes do not meet the relevant FATF Standards and do not comply with the proposed recommendations. On the other side, there is a critical point is that should be considered countries that are on the blacklist are starting to comply with FATF's recommendations regularly. If they take AML / CTF measures and reduce money laundering measures in their country, it is possible they can be blacklisted.


High-Risk Jurisdictions


The FATF blacklist or OECD blacklist has been published by the Financial Action Task Force since 2000 and lists the countries that it has decided not to cooperate in the global fight against money laundering and terrorist funds. FATF explains that High-Risk Jurisdictions Subject to a Call for Action have significant strategic shortcomings in their regimes in terms of money laundering and preventing terrorist financing.


Democratic People's Republic of Korea (DPRK)


FATF has been placed on the blacklist due to the important deficiencies in the prevention of money laundering and financing of the terrorism (AML / CFT) regime and the serious threats to the integrity of the international financial system. FATF warns DPRK to address AML / CFT deficiencies promptly and in a meaningful way. Since the DPRK is included in the Black List, it is subject to some sanctions by FATF member countries. DPRK Sanctions are the economic and financial sanctions imposed by the DPRK to force them to disinfect nuclear weapons. Furthermore, Sanctions are also imposed to punish cyber-attacks, money laundering, and human rights violations.


Iran


In June 2016, Iran had committed to address its strategic shortcomings, but since it did not address these shortcomings, FATF stated that in February 2020 Iran did not complete its action plan and blacklisted it. FATF has announced that it will remain on the blacklist until the Iranian regime accepts anti-terrorism financing standards. There are national sanctions against Iran, especially the US and UN sanctions. These are generally economic, scientific, and military sanctions.


What is FATF Greylists?


Judicial Powers Under Increased Monitoring works with the FATF to address strategic deficiencies in their regime against money laundering, anti-terrorist financing. The main purpose of the greylist is to subject the member country to increased monitoring, which it undertakes to quickly address the identified strategic shortcomings in the agreed time frames. FATF and FATF-style regional bodies (FSRBs) should continue to report progress towards addressing identified strategic shortcomings. FATF member countries should complete these jurisdictions and agreed on action plans within the proposed timeframe. Countries that do not complete commitments make new commitments, and FATF welcomes these commitments and follows them but if such commitments are not fulfilled, such as Iran, they have some sanctions on their FATF. The FATF reviews additional jurisdictions with strategic deficiencies in its regimes in the fight against money laundering, terrorist financing, and the spread of arms financing.


Countries on the FATF Greylist


Although the greylist is constantly updated, the most recent countries on the greylist are Albania, The Bahamas, Cambodia, Ghana, Iceland, Yemen, Jamaica, Mongolia, Myanmar, Nicaragua, Barbados, Panama, Botswana, Syria, Uganda, Zimbabwe, Mauritius, Pakistan. Apart from these, there are Trinidad and Tobago, whose jurisdictions are no longer subject to monitoring.


FATF Blacklists and Greylists Check


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