Financial Action Task Force blacklist
 |
The FATF blacklist, now called the "Call for action"[by whom?],[1] was the common shorthand description for the Financial Action Task Force (FATF) list of "Non-Cooperative Countries or Territories" (NCCTs).[2][3] The FATF blacklist has been issued by the FATF since 2000, and lists countries which FATF judges to be non-cooperative in the global fight against money laundering and terrorist financing, calling them "Non-Cooperative Countries or Territories" (NCCTs).[4] Although non-appearance on the blacklist was perceived to be a mark of approbation for offshore financial centres (or "tax havens") who are sufficiently well regulated to meet all of the FATF's criteria, in practice, the list included countries that did not operate as offshore financial centres. The FATF updates the blacklist regularly, adding or deleting entries.[4]
FATF describes “High-risk jurisdictions subject to a Call for Action” as having “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 risks emanating from the country”.[5] As at 21 February 2020, only two countries were on the FATF blacklist: North Korea and Iran.
History
FATF was established by the G7 summit that was held in Paris in 1989. Founding stakeholders include the G-7 Heads of State or Government, President of the European Commission and eight other countries.[6]
The term "non-cooperative" was criticized by some analysts as misleading, as a number of countries on the list simply lacked the infrastructure or resources to cope with relatively sophisticated financial criminals who tried to operate there. Since 2008 the FATF has, at the behest of G20 leaders, installed a more analytical process of identifying jurisdictions deficient in their anti-money laundering and anti-terrorist financing regimes.[4]
Primary Works
One of the main objectives of the FATF is to establish norms and standards of "legal, regulatory and operational measures" to fight against money laundering, terrorist financing and other related threats to the security and integrity of the international financial system. However, FATF "has no investigative authority." FATF works with nation-states to bring legislative changes and regulatory reforms in the aforementioned sectors.[4] In addition, the FATF also provides policy recommendations that meet international standards to countries for combating money laundering and the financing of terrorism and proliferation of weapons of mass destruction. FATF has been providing policy recommendations since 1990 and their recommendations have revised four times since then. FATF also monitors the situations of its members in establishing adequate measures and institutions to fight against money laundering and terrorist financing. FATF also makes sure that it is aware of national-level vulnerabilities of its member states "with the aim of protecting the international financial system from misuse."[7]
Member nations
Full members
According to its official website, there are 39 members of FATF, representing most financial centres around the world.[8]
Argentina
Australia
Austria
Belgium
Brazil
Canada
China
Denmark
European Commission
Finland
France
Germany
Greece
Gulf Cooperation Council
Hong Kong, China
Iceland
India
Ireland
Israel
Italy
Japan
South Korea
Luxembourg
Malaysia
Mexico
Netherlands
New Zealand
Norway
Portugal
Russian Federation
Saudi Arabia
Singapore
South Africa
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
Observer nations
There is currently one FATF observer.[9]
FATF Blacklisting reports
The Blacklist is a term used by the media, which is officially called as "Call for action" nations by the FATF.
June 2000 report
The initial list of fifteen countries regarded as uncooperative in the fight against money laundering, was published in June 2000.[11] The list met criticism from professionals experienced in the offshore financial sector. The designation of the Cayman Islands as non-cooperative was thought to be harsh,[12][better source needed] particularly as the 2000 report itself acknowledged that "the Cayman Islands has been a leader in developing anti-money laundering programs throughout the Caribbean region. It has served as president of the Caribbean Financial Action Task Force, and it has provided substantial assistance to neighboring states in the region. It has demonstrated cooperation on criminal law enforcement matters, and uncovered several serious cases of fraud and money laundering otherwise unknown to authorities in FATF member states."[citation needed] The list consisted of the following countries:[11]
June 2001 report
The second FATF report, published in 2001 and including a supplemental report in September, denoted a further eight countries as non-cooperative:
June 2002 report
According to June 2002 report from FATF, following countries were listed as NCCTs.[13]
June 2003 report
According to June 2003 report from FATF, the following countries were listed as NCCTs.[14]
July 2004 report
According to July 2005 report form FATF, the following countries were listed as NCCTs.[15]
June 2005 Report
According to June 2005 report from FATF, the following were listed as NCCTs.[16]
June 2006 report
The seventh list, published in June 2006,[17] listed only the following country as non-cooperative:
June 2007 report
FATF's Eighth NCCT Review (Annual Review of Non-Cooperative Countries and Territories 2006–2007, dated 12 October 2007) listed no countries as non-cooperative.[18] Myanmar (formerly Burma) was removed on 13 October 2006, Nauru on 13 October 2005 and Nigeria on 23 June 2006.[18]
June 2008 report
FATF identified Uzbekistan, Iran, Pakistan, Turkmenistan, and São Tomé and Príncipe, and the northern part of Cyprus as high risk and non-cooperative.[19]
June 2009 statement
FATF issued a "public statement" on 25 February 2009 noting concerns and encouraging greater compliance by the following countries:[20]
October 2010 Statement
The following country has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the FATF to address the deficiencies.[21]
October 2011 Statement
The following countries have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies.[22]
February 2012 statement
A total of 17 countries were labeled as high-risk and non-cooperative jurisdictions by FATF. All listed countries below are defined as such; counter-measures were in force only for Iran and the Democratic People's Republic of Korea (DPRK, North Korea).[23]
High-risk and non-cooperative countries, to whom counter-measures applied:
High-risk and non-cooperative countries, not committed to an action plan:
June 2013
A total of 14 countries were identified as jurisdictions that have strategic deficiencies that pose a risk to the international financial system.[24]
Jurisdictions subject to a FATF call on its members and other jurisdictions to apply counter-measures to protect the international financial system from the ongoing and substantial money laundering and terrorist financing (ML/TF) risks emanating from the jurisdictions.
Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan.
October 2013 statement
A total of 13 countries were identified as jurisdictions that have strategic deficiencies that pose a risk to the international financial system.[25]
Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan.
February 2014
A total of 11 countries were identified as jurisdictions with strategic deficiencies posing a risk to the international financial system.[26]
Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan.
June 2014 statement
A total of 6 countries were identified as jurisdictions that have strategic deficiencies that pose a risk to the international financial system.[27]
Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan.
February 2015 statement
The FATF identified following countries which have made significant progress in improving its AML/CFT regime and noted that these countries have established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified. The following countries are therefore no longer subject to the FATF's monitoring process under its on-going global AML/CFT compliance process.[28]
October 2015 statement
The FATF statement issued on 23 October 2015 identified three high-risk and non-cooperative jurisdictions:[29]
Call to apply counter-measures:
Jurisdictions with strategic deficiencies:
February 2016 statement
The FATF statement from 19 February 2016 dropped Panama from its gray list,[30] but there is still the OECD Myanmar from the list identifying two high-risk and non-cooperative jurisdictions:[31]
Call to apply counter-measures:
February 2017 Statement
Regarding with North Korea, the FATF released the following concern:
"The FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its anti‑money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. The FATF urges the DPRK to immediately and meaningfully address its AML/CFT deficiencies. Further, FATF has serious concerns with the threat posed by DPRK’s illicit activities related to the proliferation of weapons of mass destruction (WMDs) and its financing."[32]
Current FATF lists
Current FATF blacklist
As of 03 August 2020, the following countries are on this list:[1]
Current FATF greylist
As of 03 August 2020, the following 18 nations are on this list:[1]
| Greylisted Country | Greylisted Since 2019 | # action points to be met | # action points still unmet | Details | See also |
|---|---|---|---|---|---|
| Albania | Economy of Albania | ||||
| Bahamas | Offshore financial services of the Bahamas | ||||
| Barbados | Financial services in Barbados | ||||
| Botswana | Economy of Botswana | ||||
| Cambodia | Economy of Cambodia | ||||
| Ghana | Ghana | ||||
| Iceland | Economy of Iceland | ||||
| Jamaica | Tax rates in Jamaica | ||||
| Mauritius | Financial services in Mauritius | ||||
| Mongolia | Economy of Mongolia | ||||
| Myanmar | Economy of Myanmar | ||||
| Nicaragua | Economy of Nicaragua | ||||
| Panama | Panama as a tax haven | ||||
| Pakistan | June 2018[33] Previously greylisted in 2008 and from 2012 to 2015.[34] |
27 | 13 | Though made progress but still noncompliant, has exhausted 15-month plan and been given final 4 months.[35][36] | Economy of Pakistan |
| Syria | Economy of Syria, Syrian civil war | ||||
| Uganda | Economy of Uganda | ||||
| Yemen | Economy of Yemen, Yemeni Crisis (2011–present), Yemeni Civil War (2015–present), | ||||
| Zimbabwe | Economy of Zimbabwe |
Next FATF review meeting
The FATF Plenary, the decision making body, meets three times a year around February, June and October.[37][35] The last review meeting took place between 16-21 February 2020 in Paris.[35]
Other similar lists
OECD "gray list"
Although its main focus is on tax crime, OECD is also concerned with money laundering and has complemented the work carried out by the FATF.[38]
The OECD has maintained a 'blacklist' of countries it considers "uncooperative tax havens" in the drive for transparency of tax affairs and the effective exchange of information, officially called "The List of Uncooperative Tax Havens". Since May 2009, no countries were officially listed as uncooperative tax havens in the light of their commitments to implement the OECD standards.[39]
On 22 October 2008, at an OECD meeting in Paris, 17 countries led by France and Germany decided to draw up a new blacklist of tax havens. It had been asked to investigate around 40 new tax havens where undeclared revenue was hidden and which hosted many of the non-regulated hedge funds that came under fire during the financial crisis of 2007–08. Germany, France, and other countries called on the OECD to add Switzerland to a blacklist of countries which encourage tax fraud.[40] On 2 April 2009, the OECD published a list of countries, divided into three parts depending on whether they implemented an "internationally agreed tax standard", in select jurisdictions – tax havens or other financial centers of interest.[41]
- substantially implemented the standard: Andorra, Anguilla, Antigua and Barbuda, Argentina, Aruba, Australia, Austria, Bahamas, Bahrain, Barbados, Belgium, Belize, Bermuda, Brazil, British Virgin Islands, Brunei, Canada, Cayman Islands,[42] Chile, China, Cook Islands, Costa Rica, Cyprus, Czech Republic, Denmark, Dominica, Estonia, Finland, France, Germany, Gibraltar, Greece, Grenada, Guernsey, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, South Korea, Liberia, Liechtenstein, Luxembourg, Macao, Malaysia, Malta, Marshall Islands, Mauritius, Mexico, Monaco, Montserrat, Netherlands, Netherlands Antilles, New Zealand, Norway, Panama, Philippines, Poland, Portugal, Qatar, Russia, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Samoa, San Marino, Seychelles, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, Turks and Caicos Islands, United Arab Emirates, United Kingdom, United States, US Virgin Islands, Vanuatu. This is not a complete list, as many countries, including Lebanon, Nigeria and many more are not included in this list.
- committed to the standard, but have not yet substantially implemented it: Nauru, Niue, Guatemala, Uruguay
- have not committed to the standard: none as of October 2009.[43]
Global forum compliance
The Global Forum on Transparency and Exchange of Information for Tax Purposes reviews and issues reports on compliance of its member tax jurisdictions. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2).[citation needed]
Other nations regularly accused of terror financing
Bahrain, Qatar, Saudi Arabia and UAE have been also been regularly accused of doing very little to prevent flow of funds for the terror financing in other nations. Bahrain accepts Muslim Brotherhood affiliate Minbar as an legitimate political player. Qatar directly its interactions with militants by financing "Unites States designated terrorist organisation" Hamas and by allowing several "designated terrorist" units of Taliban to maintain their offices in Qatar. Saudi Arabia also collaborates with the Muslim Brotherhood affiliate al-Islah in Yemeni. Saudi Arabia and UAE are pointed out as hypocrites as they too face accusations of not doing enough to stop terror financing and both nations have links to terrorist organisations from Afghanistan to Yemen.[44]
See also
- Asia/Pacific Group on Money Laundering
- Hawala
- Hundi
- Informal value transfer system
- Remittance
- Riba
- List of offshore financial centres
- Terrorism financing
References
- ^ a b c FATF nations, Full member nations, Observer nations, Call for action nations (Blacklisted nations), Other monitored jurisdictions (greylisted nations), FATF, accessed 24 October 2019.
- ^ "About FATF". FATF. Retrieved 1 May 2018.
- ^ Chohan, Usman W. (14 March 2019). "The FATF in the Global Financial Architecture: Challenges and Implications". International, Transnational & Comparative Law Journal. UNSW Business School; Critical Blockchain Research Initiative (CBRI); Centre for Aerospace & Security Studies (CASS). doi:10.2139/ssrn.3362167. SSRN 3362167.
- ^ a b c d "FATF Works". FATF. Retrieved 1 May 2018.
- ^ "Countries - Financial Action Task Force (FATF)". www.fatf-gafi.org.
- ^ "History of FATF". FATF. Retrieved 1 May 2018.
- ^ "Policy Recommendations". Retrieved 1 May 2018.
- ^ "FATF Members and Observers". FATF. Retrieved 4 July 2019.
- ^ "FATF Observers". FATF. Retrieved 5 July 2018.
- ^ "Indonesia obtains FATF observer status". The Jakarta Post. 5 July 2018. Retrieved 5 July 2018.
- ^ a b FATF Public Statement 22 February 2013: High-risk and non-cooperative jurisdictions
- ^ Jeremy Hetherington-Gore (n.d.), The Cayman Islands – Paradise Regained? lowtaxnet.
- ^ "June 2002 Report" (PDF). FATF. Retrieved 2 May 2018.
- ^ "June 2003 report" (PDF). FATF. Retrieved 2 May 2018.
- ^ "July 2004 Report" (PDF). FATF. Retrieved 2 May 2018.
- ^ "June 2005 Report" (PDF). FATF. Retrieved 2 May 2018.
- ^ Error:- 404 - Financial Action Task Force (FATF) Archived 15 July 2006 at the Wayback Machine
- ^ a b "Annual Review of Non-Cooperative Countries and Territories 2006-2007: Eighth NCCT Review" (PDF). Financial Action Task Force (FATF). Archived from the original (PDF) on 31 October 2008.
- ^ FATF Statement - 20 June 2008 Financial Action Task Force (FATF)
- ^ FATF Statement concerning Iran, Uzbekistan, Turkmenistan, Pakistan* and São Tomé and Príncipe - 26 June 2009 Financial Action Task Force (FATF)]
- ^ "FATF Public Statement 2010". FATF. Retrieved 2 May 2018.
- ^ "FATA Public Statement 2011". FATF. Retrieved 2 May 2018.
- ^ "FATF Public Statement - 16 February 2012". FATF. 16 February 2012. Retrieved 6 October 2014.
- ^ "FATF Public Statement - 21 June 2013". FATF. 21 June 2013. Retrieved 6 October 2014.
- ^ "FATF Public Statement - 18 October 2013". FATF. 18 October 2013. Retrieved 6 October 2014.
- ^ "FATF Public Statement - 14 February 2014". FATF. 14 February 2014. Retrieved 6 October 2014.
- ^ "FATF Public Statement - 27 June 2014". FATF. 27 June 2014. Retrieved 6 October 2014.
- ^ http://www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/documents/fatf-compliance-february-2015.html
- ^ "FATF Public Statement - 23 October 2015". Financial Action Task Force (FATF). Retrieved 20 November 2015.
- ^ "Panama out of FATF gray list, but there is still the OECD". Panamá América S.A. 19 February 2016. Retrieved 8 May 2016.
- ^ "FATF Public Statement - 19 February 2016". Financial Action Task Force (FATF). Retrieved 7 May 2016.
- ^ "TATF Public Statement 2017". FATF. Retrieved 2 May 2018.
- ^ [Pakistan gets four months to avoid FATF blacklist Pakistan gets four months to avoid FATF blacklist], The Express Tribune (Pakistan), 18 October 2019.
- ^ Pakistan on FATF’s grey list: what, why, and why now?, Dawn (newspaper), 10 June 2019.
- ^ a b c Clear warning: FATF statement, Business recorder, 22 October 2019.
- ^ The FATF tribulations, Business recorder, 23 October 2019.
- ^ Pakistan fails to meet terror finance watchdog's action points, Qrius, 17 June 2019.
- ^ "Tax and crime - Organisation for Economic Co-operation and Development".
- ^ List of Unco-operative Tax Havens Organisation for Economic Co-operation and Development] n.d., retrieved 7 May 2016
- ^ Calls from 17 countries for new tax haven blacklist euronews, world news, 21 October 2008
- ^ "A Progress Report on The Jurisdictions Surveyed by The OECD Global Forum in Implementing The Internationally Agreed Tax Standard" (PDF). OECD. 2 April 2009. p. 10.
- ^ Bangkok Post, 12 March 2010, p. B5
- ^ "A Progress Report on The Jurisdictions Surveyed by The OECD Global Forum in Implementing The Internationally Agreed Tax Standard" (PDF). 20 October 2009. Archived from the original (PDF) on 22 October 2009. Retrieved 5 November 2018.
- ^ Qatar’s Links to Terrorism: The War of Narratives, Fair Observer, 21 October 2019.