3. What is FATF?
The Financial Action Task Force
(FATF) leads global action to
tackle money laundering (such
as from the drugs trade),
terrorism, and proliferation
financing.
4. Introduction
• Intergovernmental organization
• Aims to combat money laundering and terrorist
financing
• Established in 1989
• Founder: Group of Seven
• President: T Raja Kumar (took office on July 1, 2022)
• Headquarters: Paris, France
5. History
Background:
Emergence due to increasing global financial crime
• illicit activities such as money laundering and terrorist
financing were becoming more sophisticated and
globalized.
• a significant threat to the stability and integrity of
financial markets and institutions worldwide
G7 Summit (1989) initiated its creation
• discussions centered on the need for coordinated efforts
to address the rising threat of money laundering
• the necessity of creating a unified approach to combat
financial crime on a global scale.
01
7. History (Cont…)
Key Milestones:
• Establishment in Paris in 1989
• First 40 Recommendations in 1990
• Then revised in 1996, 2001, 2003, 2012, 2019, and most
recently in 2022
• Expanded focus to terrorist financing after 9/11
02
8. FATF Membership
• FATF has 39 member countries
• Collaborates with over 200 jurisdictions
(countries & territories)
• Includes both developed and developing nations
• Importance of global participation to counter
financial crime:
Involving countries from all around the world is crucial
because financial crime often crosses borders. To
effectively tackle these crimes, cooperation on an
international level is necessary, as criminals can exploit
(use) different jurisdictions to hide their activities.
9. What they do?
• The FATF researches how money is
laundered and terrorism is funded,
promotes global standards to mitigate
the risks, and assesses whether
countries are taking effective action.
• It trains officials in anti-money
laundering and counter-terrorist
financing techniques.
• Exploding the use of technologies to
prevent money laundering.
10. Why FATF was
created?
To stop illegal money from flowing into the Soviet Union:
After the Cold War, the Soviet Union was in economic trouble and people were
putting illegal money into the country. This was a problem because it could help
the Soviet Union recover.
To set international standards:
FATF sets international standards to combat money laundering and terrorist
financing. These standards are used by over 200 countries and jurisdictions to
prevent criminals from using the financial system to launder money or finance
terrorism.
To keep the financial world safe:
FATF works to keep the financial world safe by identifying and addressing
money laundering and terrorist financing risks. This includes providing technical
assistance to countries to help them implement FATF's standards and to
improve their financial intelligence capabilities.
11. Importance of financial system’s integrity for
global security
FATF think that it's really important to keep the
money system honest and safe around the
world.
• Financial systems are the foundation of
our economy
• Financial systems are also used to launder
money and finance terrorism
• A secure financial system is essential for
national security.
12. Ways to protect financial
systems' integrity
● Strengthen CDD practices
● Increase transparency.
● Improve cybersecurity.
● Support international cooperation.
13. Objectives
Primary Objectives:
• Develop and promote policies to
combat money laundering: The main goal
is to create effective strategies and guidelines
• Combat the financing of terrorism: It
works to cut off the money that terrorist groups
need to carry out their harmful activities
• Enhance the integrity of financial
systems: The FATF wants to ensure that the
world's financial systems are trustworthy and
safe for everyone to use
14. Objectives (Cont…)
Role in International Cooperation:
• Sets standards and promotes their
implementation
• Monitors the progress of member countries
The FATF keeps an eye on how well its members are doing.
If a country isn't doing well, the FATF can helpguide them to
improve.
These standards are like rules that help countries create laws
and strategies to fight financial crime effectively. It encourages
nations to actually put these rules into practice.
15. Countries
● Iceland
● India
● Ireland
● Israel
● Italy
● Japan
● Korea
● Luxembourg
● Malaysia
● Mexico
● Netherlands
● New Zealand
● Norway
● Portugal
● Russian
Federation *
● Saudi Arabia
● Singapore
● South Africa
● Spain
● Sweden
● Switzerland
● Türkiye
● United Kingdom
● United States
● Argentina
● Australia
● Austria
● Belgium
● Brazil
● Canada
● China
● Denmark
● Finland
● France
● Germany
● Greece
● Hong Kong
● China
16. Categories of lists
White list:
It is a safe side, the country is free from terror funding and money
laundering .
Grey List:
Those countries which are not considered as the safe haven for
supporting terror funding and money laundering, Now Grey list is a warning
given to the country.
The country has committed to resolve the identified strategic deficiencies
within agreed timeframes.
Black list:
If a country is unable to control of terror funding and money laundering, it is
shifted from grey list to black list by the FATF.
17. Grey list
● Nigeria
● Panama
● Philippines
● Senegal
● South Africa
● South Sudan
● Syria
● Tanzania
● Türkiye
● Uganda
● United Arab Emirates
● Vietnam
● Yemen
● Democratic People's
Republic of Korea
● Iran
● Myanmar
● Albania
● Barbados
● Burkina Faso
● Cameroon
● Cayman Islands
● Croatia
● Democratic Republic
of Congo
● Gibraltar
● Haiti
● Jamaica
● Jordan
● Mali
● Mozambique
Black list
18. Function of FATF
FATF ensures a global response against terrorist funding, money
laundering, corruption, organized crimes.
To keep an eye on money and monetary sources of
criminals.
Works to obstruct the monetary help for weapons of mass
destruction.
Evaluates any country’s strength and commands over
frameworks against money laundering and terror
financing.
19. FATF Role to Combat Global Terrorism
● Makes decisions and sets some standard
● To protect the integrity of the international financial
system
● Collaboration with the regional bodies.
● Monitoring the policies and progress of its member
countries
● Identifying national-level vulnerabilities to protect
the IFS against misuse.
20. MAIN BODIES AND DEPARTMENTS OF FATF
Plenary:
Sets the strategic direction, adopts and updates the FATF Recommendations,
and oversees the work of the organization.
Working Groups:
Responsible for developing and revising standards, guidance, and best
practices.
I. Policy Development Group (PDG)
Developing and reviewing FATF's policy and standards.
II. Risk, Trends, and Methods Group (RTMG)
Analyzing emerging RTM related to money laundering, terrorist financing.
21. MAIN BODIES (CONT...)
Global Network Coordination Group (GNCG)
Oversees the FATF's global network which work to implement the FATF
standards at the regional level.
FATF Secretariat
Provides administrative and logistical support
Assists in the organization of meetings, the development of documents.
FATF Presidency
Responsible for chairing the Plenary meetings and leading the organization's
strategic initiatives during its term.
22. Achievements
Setting International
Standards:
which provide a comprehensive
framework for countries to
combat money laundering.
Mutual Evolution:
FATF conducts mutual
evaluations of its
member countries' AML
and CTF systems.
Global Network:
FATF has expanded its
membership to include
over 200 jurisdictions,
including both countries.
FATF has encouraged public-
private partnerships and
collaboration to enhance the
effectiveness of preventive
measures.
Private Sector Engagement:
23. Collaborations
International
Organizations:
FATF collaborates with
international organizations
such as UN, World Bank
and WCO
Law Enforcement
and Intelligence
Agencies:
To share information and
expertise related to financial
crime investigations and
prevention. E.g. INTERPOL
Regional Bodies:
It has established regional-
style bodies such as the
Asia/Pacific Group on Money
Laundering and the Middle
East and North Africa
Financial Action Task Force.
Research and
Academic Institutions:
FATF stay informed about
emerging trends, risks, and
technologies.
01 02
03 04
25. Virtual Assets
Virtual assets (crypto assets) refer to any digital representation of value
that can be digitally traded, transferred or used for payment.
They are largely unregulated, and also have the potential to become
worthless and are vulnerable to cyber attacks and scams.
Without proper regulation, virtual assets also risk becoming a safe haven
for the financial transactions of criminals and terrorists.
The FATF has been closely monitoring developments in the crypto sphere
and has issued global, binding standards to prevent the misuse of virtual
assets.
26. How do the FATF Standards apply to
virtual assets ?
• Implement the same preventive
measures as financial institutions
• Obtain beneficiary information
when making transfers
• Understand the money laundering
and terrorist financing risks the
sector faces
• License or register virtual asset
service providers
• Supervise the sector, in the same
way it supervises other financial
institutions
Services Provider by:
Countries by:
27. • Undermines legitimacy of private sector
• Economic distortion and instability
• Loss of revenue
• Volatility in exchange rates and interest rates due to
unanticipated transfers of funds
• Rise of economic prices Affects trade and
international capital flows
Affect on economy
28. Corruption
• Corruption is a key factor in both predicate
criminal activities and money laundering
• Corruption generates enormous profits to be
laundered
• Systemic corruption undermines regulatory
and legislative AML/CFT regimes
• Systemic corruption undermines institutional
development
29. If FATF Standards effectively implemented they can
aid investigations by:
• increasing transparency of the financial
system
• facilitating investigation and
prosecution of corruption and money
laundering
• safeguarding the integrity of the public
sector
• protecting designated private sector
institutions from abuse
30. Environmental Crime
• Environmental crime is one of the most
profitable criminal enterprises, generating
around USD 110 to 281 billion in criminal gains
each year.
• It covers a wide range of unlawful activities
such as illegal logging, illegal wildlife trade and
waste trafficking.
• Despite the negative impact, law enforcement
and environmental agencies, as well as banks,
lenders and other financial institutions
31. Money Laundering and the
Illegal Wildlife Trade
• The illegal wildlife trade is a major transnational organized crime, which generates
billions of criminal proceeds each year.
• The Financial Action Task Force (FATF) has conducted a new study to provide
guidance to countries on measures they can take to combat money laundering
from the illegal wildlife trade.
To combat the financial flows from the illegal wildlife trade, countries should
therefore as a priority:
1. Identify and assess their money laundering risks relating to the illegal wildlife
trade.
2. Ensure that national laws and powers for law enforcement allow authorities to
go after the finances of wildlife traffickers, and to pursue financial
investigations.
32. Mutual Evaluation Process
The Financial Action Task Force (FATF) employs a mutual evaluation
process to assess the effectiveness of its member countries' anti-money
laundering and counter-terrorist financing (AML/CFT) systems.
This process involves member countries evaluating each other's
compliance with the FATF's recommendations and providing feedback.
It's a collaborative effort to ensure global standards are upheld in
combating financial crimes.
33. Mutual Evaluation Process
During a Mutual Evaluation, a team of assessors from other FATF
member countries reviews the legal and institutional framework of the
country being evaluated. They examine how well the country's AML/CTF
regulations and systems are functioning in practice. The assessment
covers areas like legislation, law enforcement, financial regulations, and
international cooperation.
A complete mutual evaluation takes up to 18 months.
34. Mutual Evaluation Process Stages
The Mutual Evaluation process involves several steps, including:
Self-Assessment: The country being evaluated completes a self-
assessment questionnaire, providing information about its AML/CTF
measures and efforts.
On-Site Visit: A team of assessors from other FATF member
countries visits the evaluated country to conduct on-site inspections,
interviews with relevant authorities, and a review of systems in place.
35. Mutual Evaluation Process Stages
Report Preparation: Based on the information gathered during the on-
site visit and a thorough analysis of the country's AML/CTF framework,
the assessment team prepares a detailed report.
Draft Report Review: The evaluated country has the opportunity to
review and comment on the draft assessment report to ensure factual
accuracy.
36. Mutual Evaluation Process Stages
Mutual Evaluation Report: The final assessment report is presented to
the FATF plenary, which includes findings on the effectiveness of the
evaluated country's AML/CTF measures, along with recommendations
for improvements.
Follow-Up Process: The evaluated country commits to implementing
recommendations outlined in the report. FATF periodically reviews
progress through a follow-up process.
37. Goal of Mutual Evaluation Process
The goal of the Mutual Evaluation process is to enhance global
efforts against money laundering and terrorist financing by
promoting consistent and effective implementation of AML/CTF
measures among member countries.
38. Recommendations
The FATF Recommendations provide a comprehensive framework of
measures to help countries tackle illicit financial flows. These include a
robust framework of laws, regulations and operational measures to
ensure national authorities can take effective action to detect and
disrupt financial flows that fuel crime and terrorism, and punish those
responsible for illegal activity.
39. Recommendations
Assessing risks and applying a risk-based approach :
Countries should identify, assess, and understand the ML/TF risks for the
country
Designation of an authority or mechanism to coordinate actions to assess
risks, and apply resources, aimed at ensuring the risks are mitigated
effectively.
Countries should apply a risk-based approach (RBA) in accordance with
risks identified.
40. Recommendations
National cooperation and coordination
Countries should have national AML/CFT policies & designate an authority or
have a coordination or other mechanism that is responsible for such policies.
Money laundering offence
Criminalize ML and apply the crime of money laundering to all serious offences.
41. Recommendations
Terrorist financing offence
Freeze or seize property involved in TF and put sanctions on militant groups .
Targeted financial sanctions related to terrorism and terrorist financing
• Targeted financial sanctions regimes to comply with UNSC resolutions
relating to the prevention and suppression of terrorism and terrorist
financing.
42. Timeline of Pakistan On FATF list :
Feb , 28,2008 : Pakistan unable to meet the standards of
FATF that’s why add into grey list.
June,2010: Pakistan was taken off the FATF monitoring list
after the country showed progress of AML/ TF.
Feb ,16,2012 :Pakistan was placed on FATF grey list again.
43. Reasons :
Osama bin Laden was found in Pakistan in 2011.
Who was declared as international terrorist. lt as a question mark
on security agencies of Pakistan.
Pakistan was disobeying UN 2 resolutions:
• United Nation Security Council Resolution 1267
• United Nation Security Council Resolution 1373
44. Reasons :
These resolution stated that:
• No country is allowed to support any militant group within its
territory. They will seize its assets put sanctions on them and if any
country don't follow these rule it will be grey listed.
45. Reasons :
2012 : Few militant groups who were operating in Pakistan and by the
passage of time their assets were increasing and no sanctions were put on
them.
Those militant group includes:
Lashkar e taiba
Jamat ud dawa
46. Reasons :
After 3 years Pakistan exited grey list by taking 3 measures:
• Anti-Terrorism Amendment Act.
• National Security Policy 2014. It was revised in 2015.
• After APS-Peshawar attack, National Action Plan 2014 was
made. Pakistan worked on its point progressively.
Feb ,26,2015 : Pakistan was removed from grey list.
47. 3rd time in grey list
Lahore high court removed all the sanctions from Jamat ud dawa
(Militant group) leader Hafiz Saeed and unseized his assets that was
against the rules of FATF.
Because of this decision Pakistan was grey listed again in 2018.
FATF recommended 27 recommendations, Pakistan had to work on it in
order to exit grey list. Additional 6 recommendations were added to
these 26 recommendations. Pakistan worked on 26 recommendations out
of 27.
48. Pakistan Working
Indian & American Factors :
America want Pakistan to support it in Afghanistan peace
process on American terms and condition, but it will comprise
Pakistan national interest so Pakistan doesn't allow it.
India blamed Pakistan's that militant organization are working
in India and spreading terrorism so Pakistan should stop these
groups America forced FATF to put sanctions on Pakistan as
we are not fulfilling American terms and condition.
49. MEASURES THAT SHOLD BE TAKEN BY PAKISTAN
1st Measure:
Pakistan should stop money laundering with the help of theses
organizations:
State bank of Pakistan
Security Exchange commission of Pakistan
Federal board of revenue (FBR)
2ND Measure:
Pakistan should build strong relation with other countries So that they can
support Pakistan in FATF.
50. The role of IB Pakistan :
The Intelligence Bureau (IB) shared 47 sensitive reports and 91 financia
information with anti-money laundering agencies to get Pakistan
removed from FATF's gray list.
The IB also provided the Prime Minister names of 29 political figures
and 89 senior government officials involved in smuggling petrol worth
billions of rupees from Iran to Pakistan
52. Implementation for the world
Problem in getting loans from international
institutions (IMF, World Bank, ADB etc.) and
countries.
Overall Reduction in its international trade.
International boycott.
Economic will be in the bad condition.
53. Conclusion
In conclusion, the Financial Action Task
Force (FATF) serves as a pivotal player
in the global fight against money
laundering and terrorist financing.
Established in 1989, the FATF's primary
objective is to set international standards
and promote effective implementation of
measures to safeguard the integrity of
the international financial system.
55. CREDITS: This presentation template was
created by Slidesgo, including icons by Flaticon,
infographics & images by Freepik and
illustrations by Storyset
Thanks!
Editor's Notes
FATF Associate Members
Asia/Pacific Group on Money Laundering (APG)
Caribbean Financial Action Task Force (CFATF)
Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL)
Eurasian Group (EAG)
Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)
