Syllabus: 

GS 2: Important International Institutions, agencies and fora - their Structure and mandate.

GS 3: Challenges to Internal Security through Communication Networks, Role of Media and Social Networking Sites in Internal Security Challenges, Basics of Cyber Security; Money-Laundering and its Prevention.

Context: 

India is planning to bring back Pakistan into the grey list of the Financial Action Task Force (FATF) in the wake of the devastating Pahalgam attack.

More on the News

• Pakistan was put in the ‘grey list’ in June 2018, and faced “increased monitoring” till it was removed in October 2022. 
• Despite its removal from the grey list in October 2022 following acknowledged progress on technical action plans, India voiced scepticism, emphasising the necessity of verifiable, irreversible, and sustained action against terrorism. 
• India can strategically leverage the FATF framework regarding Pakistan’s persistent failure to meet its obligations under FATF recommendations, particularly in the context of the Pahalgam attack’s links to LeT.

Pakistan’s history with the FATF

Pakistan has been regularly scrutinised by the FATF, marked by repeated placements on the grey list due to persistent deficiencies in its anti-money laundering (AML) and counter-terrorist financing (CFT) standard. 

This shows its failure to effectively counter ‘terrorist financing’ emanating from its territory. 

• This includes inadequate action against UN-designated terrorist groups like Lashkar-e-Taiba (LeT) and Jaish-e-Mohammed (JeM).

Since Pakistan removal from the grey list in 2022, India has constantly highlighted a cyclical pattern where Pakistan’s compliance efforts may not be consistently maintained with the standards of FATF.

About FATF

• FATF is a Paris-based intergovernmental body that  underpins the fight against money laundering and terrorism financing by setting global standards and checking if countries respect them.
• Origin: The FATF was established in 1989 by the Group of Seven (G7) nations at the G7 Summit in Paris, France.
• Objective: The FATF was established to combat money laundering and in 2001, expanded its mandate to include terrorist financing. Since 2019, it operates under an open-ended mandate.
• Secretariat: It is located at the Organization for Economic Cooperation and Development (OECD) Headquarters in Paris.
• Membership: It originally included the G7 countries, the European Commission and eight other countries but now  comprises of 40 members.
• This includes 38 jurisdictions and 2 regional organizations (GCC and European Commission)—along with 31 international and regional bodies as Associate Members or Observers.
• Pakistan is not a member of FATF but it is the member of the Asia Pacific Group on Money Laundering (APG). 
• India became a member of FATF in 2010 and is also a member of APG.
• The FATF membership of Russia was suspended on 24 February 2023.

Mains:

PYQ. Discuss how emerging technologies and globalization contribute to money laundering. Elaborate measures to tackle the problem of money laundering both at national and international levels. (2021).