FINANCIAL ACTION TASK FORCE - ECONOMY
NEWS: The Financial Action Task Force (FATF) Private Sector Collaborative Forum (PSCF) 2025 will be held from 25th -27th March, 2025, in Mumbai.
• The forum is being hosted by the Reserve Bank of India (RBI) and the Department of Revenue, Ministry of Finance, Government of India, reaffirming India’s responsible leadership in global efforts to combat money laundering and terrorist financing.
WHAT’S IN THE NEWS?
FATF Private Sector Collaborative Forum (PSCF) 2025
1. Annual Event for Collaboration:
• The Private Sector Collaborative Forum (PSCF) is an annual event organized by the Financial Action Task Force (FATF).
• It serves as a crucial platform for dialogue between FATF member countries, international organizations, and private sector stakeholders.
2. Objective of PSCF 2025:
• The primary goal is to strengthen the implementation of FATF’s Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) standards.
• This is achieved through fostering collaboration, sharing best practices, and addressing emerging global financial challenges.
3. Key Focus Areas in 2025:
• The PSCF 2025 agenda aligns with global financial priorities, which include:
Enhancing payment transparency to prevent illicit financial flows.
Promoting financial inclusion by ensuring access to secure and regulated financial systems.
Adapting to digital transformation within financial systems to mitigate emerging threats related to technology-driven crimes.
About the Financial Action Task Force (FATF)
1. Intergovernmental Policy-Making Body:
• The FATF is an intergovernmental organization responsible for setting international standards to combat money laundering and terrorist financing.
• It plays a key role in shaping policies at both national and international levels to ensure financial integrity.
2. Establishment and Evolution:
• The FATF was established in 1989 during the G7 Summit in Paris as a response to the growing concerns over money laundering.
• In 2001, following the 9/11 attacks, its mandate was expanded to include terrorism financing, reflecting the increasing global threat of financial crimes.
3. Headquarters and Membership:
• The FATF is headquartered in Paris, France.
• It comprises 39 members, which include 37 jurisdictions and 2 regional organizations (the Gulf Cooperation Council (GCC) and the European Commission).
• India has been a member since 2010, contributing to FATF’s global AML/CFT efforts.
• Russia’s membership was suspended on February 24, 2023, following geopolitical tensions and compliance concerns.
4. Criteria for FATF Membership:
• A country must be deemed strategically important based on factors such as a large population, significant GDP, and a well-developed banking and insurance sector.
• The country must adhere to globally accepted financial standards and demonstrate a commitment to AML/CFT regulations.
• The applicant country should actively participate in other important international organizations related to financial governance.
FATF ‘Grey List’ and ‘Blacklist’
1. FATF’s Global AML/CFT Standards:
• The FATF Recommendations serve as internationally recognized anti-money laundering (AML) and counter-terrorist financing (CFT) standards.
• Countries that fail to effectively implement these standards may be subjected to increased monitoring and risk classification.
2. Grey List (Jurisdictions under Increased Monitoring):
• A country is placed on the grey list if it is identified as a safe haven for money laundering and terror financing.
• This serves as a warning that the country must strengthen its AML/CFT measures to avoid being blacklisted.
3. Blacklist (High-Risk Jurisdictions):
• Countries that fail to comply with FATF’s AML/CFT regulations and actively support money laundering and terror financing are placed on the blacklist.
• Blacklisted nations are labeled as Non-Cooperative Countries or Territories (NCCTs).
• As of now, North Korea, Iran, and Myanmar are on the FATF blacklist.
4. Consequences of Being on the Blacklist:
• Countries on the FATF blacklist face severe economic and financial restrictions, including:
Denial of financial aid from major international institutions such as the International Monetary Fund (IMF), the World Bank, the Asian Development Bank (ADB), and the European Union (EU).
Limited access to global financial systems, making it difficult for businesses and investors to engage with these nations.
Economic sanctions and trade restrictions, further isolating the country from international markets.
Source: https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2114453