FATF: Grey List and Black List

While you are preparing for any government exams like SSC, UPSC, State PCS and so on, you have often come across these two words, Grey List and Black List. In this article, we will understand the meaning of it from an exam point of view.

Recently held meeting of a global financial watchdog FATF (Financial Action Task Force) decided to hold Pakistan in "Grey List".

Source: realmealrevolution

FATF (Financial Action Task Force)

FATF is the global financial watchdog that aims to combat terror financing and money laundering, monitors the performance of countries that are listed in "Greylist". It prevents illegal activities done at a global level that harms society.

It was established in 1989 by G-7 countries at its summit in Paris over the growing concerns of money laundering and terror financing. Initially, it was created to look upon the activities of money laundering but in the aftermath of the 9/11 attack in the USA, it had broadened its objective and included terror financing which must be checked upon by it.

• What is Grey List? 

Grey List is nothing but the list of countries in the FATF lexicon (not as such official lexicon) that are actively working on the directed guidelines of FATF to combat terror financing and money laundering. Currently, there are  27 countries in the grey list with recently added UAE while Zimbabve was taken off it. Other countries in the grey list are Pakistan, Myanmar, Morocco, Philippines, Panama, Senegal, Albania, Jamaica and Turkey.

• What is Blacklist?

The countries which are non-compliant with FATF directives are included in Blacklist by FATF. These are the countries that are at high-risk jurisdiction subject call for action. ­ North Korea and Iran are on the black list.

• What are the disadvantages of being a Greylist or Blacklist country?

All those countries which are included in the grey list by FATF have to face some sanctions as follows:

1. It is difficult for them to get aid from IMF, ADB, EU.
2. According to the IMF study, It may also affect FDI/FPI, foreign capital inflows to the countries.

Source: The Hindu