FATF retains Pakistan on grey list, adds UAE

The global financial watchdog Financial Action Task Force (FATF) has retained Pakistan on its grey list.

Context

The global financial watchdog Financial Action Task Force (FATF) has retained Pakistan on its grey list.

Other development

• The FATF included the United Arab Emirates (UAE), with which India signed a free trade agreement less than a month ago, in the list of jurisdictions requiring increased monitoring or the grey list. 
• The FATF excluded Zimbabwe from the list after a review found it compliant on all parameters.
• In all, there are 17 countries on the grey list. 

What is FATF?

• Established in: 1989 
• The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. 
• Aim: To combat money laundering, terrorist financing and other related threats to the integrity of the international financial system.
• The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. 
• As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
• Membership: The FATF currently has 39 members including two regional organisations
• the European Commission 
• Gulf Cooperation Council

What is meant by grey list?

• The 'grey list' means that a country gets limited access to international loans.
• Specifically, “it means the country has committed to resolving swiftly the identified strategic deficiencies within agreed timeframes and is subject to extra checks”. 
• Inclusion in the 'Grey List' implies "strategic deficiencies" detected in a jurisdiction's policies to prevent money laundering and terror financing.