Banking LawBusiness Law

FATF Black and Grey

1 Mins read

َWhat Exactly is The FATF Blacklist?

Being blacklisted on the Financial Action Task Force (FATF) list is quite a challenge as it can put a harsh toll on a nation’s economy and international transactions. Iran was recently named onto this list, meanwhile Pakistan is on the  FATF ‘grey list’ and has been notified and given 4 months to follow the FATF regulations or else they fall within the threat to be blacklisted. What does this term really imply and what does it imply?

According to FATF Publications,

 “High-risk jurisdictions have significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation.” For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system from the ongoing money laundering, terrorist financing, and proliferation financing (ML/TF/PF) risks emanating from the country. This list is often externally referred to as the ‘black list’.”

One of the notable outcomes from the latest FATF plenary (19-21 February 2020) is that FATF put Iran on its blacklist due to Tehran’s failure to ratify the Palermo and Terrorist Financing Conventions, noncompliance with anti-terrorism standards and its non-implementation of the anti-money laundering polices.

What is the ‘grey list’? 

The Financial Action Task Force ‘grey list’ was formally called as the ‘other monitored jurisdictions’.  It was stated in the FATF plenary outcomes, 

“Jurisdictions under increased monitoring are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring.”

  • It is vital to maintain a good and clear status in the context of international business law in order to avoid any risks and future limitations.
  • It is crucial to consider due diligence before contract drafting.
  • Always have a clear assessment and understanding of the money laundering and terrorist financing risks of your nation.
  • Abide by the FATF standards and regulations and follow the recommended policy tools in order to have the ease to operate within the international framework.
  • Remain transparent in all your financial transactions.

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Articles written exclusively by LegaMart legal professionals.

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