FATF (Financial Action Task Force) is the intergovernmental body to combat money laundering and terror financing and money laundering, it was established by the G-7 nations in 1989.

It consists of 37 countries and 2 regional organizations (The European Commission and European Union’s Executive body).

Ambit of FATF

Until the 9/11 attacks FATF focused on anti-money laundering framework but later expanded it to countering terror finance. Apart from this FATF has three main objectives:-

Monitoring the progress made by its membered nations in implementing anti-money laundering measures.
Reviewing and reporting on money laundering trends and developing measures to counter them.
Promoting the adoption of FATF anti-money laundering standards globally.

Actions against non-compliance with FATF recommendations

As recorded globally, Pakistan was released out of the grey list of FATF. This is an instance to understand the actions of FATF.

FATF primarily imposes sanctions under two categories called as Grey list and the Black list.

The nations under the Grey list are under supervision for four years (or greater, subjective to need) and they must report the implementation of FATF recommendations to reduce terror financing and money laundering within the period specified.

While those nations on the Black list have failed to implement the recommendations of FATF beyond the specified period, these nations shall face a global boycott in trade, and investments and be barred from seeking loans from international organizations.

Apart from Pakistan, several other nations are sanctioned and unspoken:-

Nations in the grey list of FATF

1. Albania

Grey listed on:- Feb/2020;

Deadline to comply:- Expired on Feb/2022 but extended to Feb/2023.

Status of compliance:- The FATF expresses concern that Albania failed to complete its action plan, which fully expired in February 2022.

The unspoken convicts of the FATF sanction list — Image Source – GIS Geography & Britannica

Active threat:- Terrorism.

Due to regional instability in the 1990s, high crime rates, and weak border security, al-Qaeda managed to gain a foothold in Albania in the mid-to-late 1990s.

Active terror groups:-

Al-Quaeda, ISIS, Nusra Front, and Albanian ethnic-nationalist movements in neighboring Kosovo and Macedonia have led to a rise in terrorist groups like the Albanian National Army, and the National Liberation Army.

2. Barbados

Grey listed on:- Feb/2020.

Deadline to comply:- Feb/2023.

Status of compliance:- Barbados should continue to work against active Drug trafficking and arms trafficking.

Drug trafficking:-

Drug traffickers use Barbados for smuggling by small vessels.
Most of the cocaine seized in Barbados comes from couriers that transit to Barbados’ Grantley Adams International Airport.
Tons of cocaine are estimated to transit to Barbados each year.

3. Burkina Faso

Grey listed on:- Feb/2021;

Deadline to comply:- Not mentioned (usually 3 years from the listing).

Status of compliance:- Burkina Faso should continue to work against Terrorism, Arms trafficking, and Drug trafficking (as reported by UNODC).

Terrorism:-

Burkina Faso saw a spike in terrorist activity in 2016.
Several attacks cost military forces and civilians many lives, including in Ouagadougou, the capital, where 28 people were killed after Islamist militants attacked the Splendid Hotel in January 2016.

4. Cambodia

Grey listed on:- Feb/2019;

Deadline to comply:- Oct/2022.

Status of compliance:- all recommendations are substantially complied, but not reviewed due to the prevailing COVID-19 situation.

Drug trafficking:-

Cambodia along with Laos, Myanmar, and Thailand fall under the golden triangle which is rich in opium cultivation, this gets smuggled across the world.

5. The Cayman Islands

Grey listed on:- Feb/2021.

Deadline to comply:- Feb/2023.

Status of compliance:- Cayman Islands should continue to work against Drug trafficking and Arms trafficking.

6. The Democratic Republic of the Congo

Grey listed on:- Feb/2019.

Deadline to comply:- Oct/2022;

Status of compliance:- Not complied with all the recommendations yet. DRC should continue to work against terrorism, wherein there are more than 100 active terrorist groups including ISIS.

7. Haiti

Grey listed on:- Jun/2021.

Deadline to comply:- Feb/2023.

Status of compliance:- Haiti should continue to work against money laundering and corruption.

8. Jamaica

Grey listed on:- Feb/2020.

Deadline to comply:- Expired on Jan/2022 but extended to comply with until Feb/2023.

Status of compliance:- Jamaica should continue to work against Drug trafficking.

9. Jordan

Grey listed on:- Oct/2021.

Deadline to comply:- Not mentioned (usually 3 years from the listing).

Status of compliance:- Jordan should continue to work against regional terror groups such as ISIS and Al-Qaeda.

10. Mali

Grey listed on:- Oct/2021.

Deadline to comply:- Not mentioned (usually 3 years from the listing).

Status of compliance:- Mali should continue to work against regional terror outfits like ISIS in the Greater Sahara and Jama’at Nusrat al-Islam wal-Muslim, al-Qa’ida, al-Murabitoun, Ansar al-Dine, and the Macina Liberation Front.

11. Morocco

Grey listed on:- Feb/2021.

Deadline to comply:- Not mentioned (usually 3 years from the listing).

Status of compliance:- Morocco has substantially completed its action plan against terrorism and made the following key reforms, but FATF is unable to visit due to the prevailing COVID-19 situation.

The FATF will continue to monitor the COVID-19 situation and conduct an on-site visit at the earliest possible date.

12. Mozambique

Grey listed on:- Oct/2022.

Deadline to comply:- Not mentioned (usually 3 years from the listing).

Status of compliance:- Mozambique has made progress on some against terrorism and will work on implementing its action plan to address its strategic deficiencies.

13. Panama

Grey listed on:- Jun/2019.

Deadline to comply:- Expired on Jan/2021 but extended to comply with until Feb/2023.

Status of compliance:- The FATF expressed significant concern over the failure of compliance against drug trafficking. And strongly urges Panama to complete its action plan by February 2024 to avoid further sanctions.

14. Philippines

Grey listed on:- Jun/2021.

Deadline to comply:- Not mentioned (usually 3 years from the listing).

Status of compliance:- Philippines needs to work on the recommendations to address drug trafficking.

15. Senegal

Grey listed on:- Feb/2021.

Deadline to comply:- Not mentioned (usually 3 years from the listing).

Status of compliance:- Senegal needs to work on the recommendations to address terrorism.

16. South Sudan

Grey listed on:- Jun/2021.

Deadline to comply:- Not mentioned (usually 3 years from the listing).

Status of compliance:- South Sudan needs to work on the recommendations to address its strategic deficiencies.

17. Syria

Grey listed on:- Feb/2010.

Deadline to comply:- Expired on Jun/ 2014.

Status of compliance:- Syria has complied with all the recommendations (against terrorism), but the FATF has been unable to conduct an on-site visit due security concerns.

18. Tanzania

Grey listed on:- Oct/2022.

Deadline to comply:- Not mentioned (usually 3 years from the listing).

Status of compliance:- Tanzania has made progress on some of the recommendations and will work to implement its FATF action plan against terrorism.

19. Türkiye

Grey listed on:- Oct/2021

Deadline to comply:- Not mentioned (usually 3 years from the listing).

Status of compliance:- Türkiye needs to work on the recommendations to address drug trafficking, human trafficking, and migrant smuggling.

20. Uganda

Grey listed on:- Feb/2020.

Deadline to comply:- May/2022 (yet incomplete in compliance).

Status of compliance:- Uganda needs to work on the recommendations to address its strategic deficiencies against terrorism.

21. The United Arab Emirates

Grey listed on:- Feb/2022.

Deadline to comply:- Not mentioned (usually 3 years from the listing).

Status of compliance:- UAE needs to work against terror outfits like Hezbollah, Hamas, and ISIS.

22. Yemen

Grey listed on:- Feb/2010.

Deadline to comply:- Expired on Jun/2014.

Status of compliance:- Yemen has substantially complied with the recommendations against terrorism.

but the FATF has been unable to conduct an on-site visit due to security concerns.

The FATF will continue to monitor the situation and will conduct an on-site visit at the earliest possible date.

Nations on the Black list of FATF

1. Democratic People’s Republic of Korea (DPRK) / North Korea

Blacklisted in:- Feb/2020 and unchanged since then.

FATF recent review:-

DPRK has failed to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism regime.
Further, the FATF has serious concerns about the threat posed by the DPRK’s illicit activities related to the proliferation of weapons of mass destruction (WMDs) and its financing.

2. Iran

Blacklisted in:- Feb/2020 and unchanged since then.

FATF recent review:-

Iran has failed to enact the Palermo and Terrorist Financing Conventions in line with the FATF Standards.

3. Myanmar

Black listed on:- Feb/2020.

Deadline to comply:- Expired on Sep/2021.

FATF recent review:-

Need to address these deficiencies, including:-

Improving understanding of money laundering risks in key areas.
Permitting on-site/offsite inspections.
Increase the freezing/seizing and confiscation of criminal proceeds, instrumentalities, and/or property of equivalent value.

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