• A “violent extremist organization under investigation” in India collected funds through “well-structured networks” including offline and online fundraising mechanisms such as circulating QR codes and account details, a latest report on ‘Crowdfunding for Terrorism Financing‘ by the Financial Action Task Force (FATF) has stated.

The Financial Action Task Force (FATF)

  • The Financial Action Task Force (FATF) is an inter-governmental body decision-making body.
  • It was established in 1989 during the G7 Summit in Paris to develop policies against money laundering.
  • It is a “policy-making body” which works to generate the political will to bring about national legislative and regulatory reforms in money laundering. It has also started dealing with virtual currencies. The FATF Secretariat is located in Paris.
  • FATF consists of thirty-seven member jurisdictions.
  • India became an Observer at FATF in 2006. Since then, it had been working towards full-fledged membership. On June 25, 2010 India was taken in as the 34th country member of FATF.

Objective of FATF

  • FATF sets standards and promotes effective implementation of
  • Legal, regulatory and operational measures for combating money laundering.
  • The FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.

FATF on terror financing

  • FATF’s role in combating terror financing became prominent after the 9/11 terror attacks in the US.
  • In 2001 its mandate expanded to include terrorism financing. Financing of terrorism involves providing money or financial support to terrorists.

FATF has 2 types of lists

  • Black List
  • Countries known as Non-Cooperative Countries or Territories (NCCTs) are put in the blacklist.
  • These countries support terror funding and money laundering activities.
  • The FATF revises the blacklist regularly, adding or deleting entries.
  • Grey List
  • Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list.
  • This inclusion serves as a warning to the country that it may enter the blacklist.

Consequences of being in the FATF grey list

Considered in the grey list may face

  • Economic sanctions from IMF, World Bank, ADB
  • Problem in getting loans from IMF, World Bank, ADB and other countries
  • Reduction in international trade
  • International boycott

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