In this video, we will briefly talk about this so-called Financial Action Task Force, FATF, now Fed
might be already an organization that you are familiar with, but perhaps you will be surprised to learn
that they are also an influential organization for sanctions compliance.
So let me start by explaining to you the background of Federoff in brief, essentially the Group of
Seven G7 countries formed in July 1989 at a summit held in Paris.
The initial purpose of Federoff was to develop international standards to combat money laundering.
However, after the terrorist attacks of September 11, 2001, FATF expanded its initial recommendations
to include combating of terrorist financing.
Federoff itself has no formal power.
Instead, Farofa influence is derived from the widespread adoption of its recommendations and its blacklist
and grey list.
Moreover, member states of the United Nations, they are expected to follow the Fed recommendations
as per a number of U.N. security resolutions.
Then the blacklist is a list of countries that FATF has determined, which are non cooperative in the
international fight against financial crime, including money laundering and terrorist financing.
This list currently includes countries such as Iran and North Korea.
Member countries often have, I expect, expected to apply countermeasures against blacklisted countries
to guard the international financial system from the risks arising out of those jurisdictions.
The grey list in Tehran is a list of countries that had first determined do not merit inclusion on the
blacklist, but have strategic deficiencies in their anti money laundering and counter-terrorism financing
regimes.
Additionally, these countries have not made sufficient progress or otherwise committed to action plans
to address the deficiencies identified by Fedder.
Ongoing failure to address these deficiencies could eventually result in being moved from the gray list
to the blacklist.
Now members of that are expected to use caution and consider the particular risks of those countries
on the grey list.
When a country is placed on the list, it may lose its access to the global financial system.
One example is the country of Pakistan.
In early 2019, India wanted Pakistan placed on the blacklist for its perceived lack of action against
proscribed terrorist groups and failure to implement and enforce measures against terrorist financing
and money laundering.
In a plenary session of of it was then decided to keep Pakistan on the grey list and not moved onto
the blacklist yet, which would have placed it among the likes of Iran and North Korea.
Phare did warn Pakistan, however, to stick to deadlines with respect to curbing terror financing and
money laundering or otherwise, it risks being placed on the blacklist in the next meeting.
Being placed on the grey list comes with consequences.
While it is not as severe as being placed on a blacklist, Pakistan loses an estimated 10 billion US
dollars annually as a result of its designation because non-governmental organizations and other financial
actors avoid the operational and reputational risks associated with dealing with Pakistan.
Sadef also evaluates countries compliance with its recommendations through so-called mutual evaluation
reports.
These reports take into account, among other things, a country's regulatory requirements, supervisory
framework of financial institutions, sanctions regimes, international cooperation and and is is really
the most important thing the implementation and adherence to Fed -- recommendation.
Now let's bridge the activities of FATF with sanctions compliance.
And in this light, I want to draw your attention to recommendations.
Six recommendations.
Six requires each country to implement the targeted financial sanctions regimes to comply with the United
Nations Security Council resolutions relating to the prevention and suppression of terrorism and terrorist
financing.
Now, the focus of Recommendation six is only preventive measures that are necessary and unique in the
context of stopping the flow of funds or other assets to terrorist groups and the use of funds or other
assets by terrorist groups in determining the limits of war, fostering widespread support for an effective
counter terrorist financing regime.
Countries must.
Also, respect human rights, respect the rule of law and recognize the rights of innocent third parties,
Recommendation six is really intended to assist countries in implementing the targeted financial sanctions
contained in the United Nations, resolutions relating to the prevention and suppression of terrorism
and terrorist financing.
These resolutions commonly require countries to freeze without delay the funds or other assets of designated
individuals or entities, and to ensure that no funds or other assets are made available directly or
indirectly to or for the benefit of any person or entity either designated by the United Nations Security
Council.
So, as you can see, FATF puts in its global weight as a standard setting body, even though this weight
is more in the sphere of anti money laundering and counter terrorist financing to urge countries around
the world to effectively implement the targeted financial sanctions regimes to comply with the United
Nations Security Council resolutions.
Now, I hope that you found this video useful.
And if you have any further questions, please let me know otherwise.
Thank you so much for watching and see you in the next video.