FATF: History and Objectives

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FATF History and Objectives
FATF History and Objectives

Within the modern world, the global financial system is portrayed as a product of globalization and something built overtime to bring equality that enables everyone to tap into the global market. It is said that the established complex web of systems works based on free market and is dependent upon all nations, yet how much of this is true? SWIFT the global standard required for foreign bank transactions is Belgian, the Dollar everyone relies upon is American and FATF an intergovernmental organization was born in France by the will of former imperialist nations, how much is it all truly for the benefit of humanity? This article will focus upon FATF, its history and objectives.

History of FATF

It at started in 1989, in a G7 (Group of Seven body headed mainly by Canada, France, Germany, Italy, Japan, the United Kingdom and America) summit in Paris where all G7 member countries came together and officially formed a new intergovernmental organization, the FATF (Financial Action Task Force). At the time of its inception the FATF had 16 members, which has grown to 39 in 2022.  Officially it was created as a response to recognizing the threats posed to the global and regional banking system and to financial institutions, this threat was mainly described as money laundering

The very first thing FATF after formation is issuing a report which contained 40 recommendations for governments that would help in fighting money laundering. In 2001 after the 9/11 terror attacks, the FATF mandate was expanded to also include terror financing to cripple banned organizations financial roots. In 2003 the earlier 40 recommendations were later revised in 2003 based upon updated money laundering techniques. Over time the FATF has continued to function, actively monitoring various nation states, and classifying them upon White/Grey/Blacklists. As of 2022 twenty-three nations are on the grey list currently undergoing revaluation, Pakistan being amongst them.

Objectives of FATF

Officially the FATF is an organization that has been give the objectives of “studying money laundering trends, monitoring legislative, financial and law enforcement activities taken at the national and international level, reporting on compliance, and issuing recommendations and standards to combat money laundering”. The objectives mentioned above are listed on FATF official website and are what the organization adjusts its own image to be. However, the role of FATF goes far beyond simply just studying, monitoring, and issuing recommendations, it is an organization managed by some of the wealthiest/ powerful nations (Such as US, France, Belgium etc.), meaning FATF decisions affect (Or rather reflect) national polices of those powerful nations.

In simpler terms, while the FATF does its main tasks of combatting money laundering and terror financing within a limited spectrum, it is also a geo-political tool used by its founders to target nations that do not comply with member strategic interests while ignoring western illegal financial activities.  The organizations decisions reflect its members national policies, which can include using blacklisting as a threat to gain geopolitical victories within other nations or simply be used as a weapon to financially destabilize adversaries.

These are not just claims as examples exist to prove FATF use case as a geopolitical tool. India is a member of FATF and has used its position to attempt getting Pakistan on the blacklist on charges of “Terror financing” separatist groups within Indian occupied Kashmir. This was primarily motivated by the intention of casing harm to Pakistan and if India had succeeded Pakistan economy would have collapsed beyond repair for decades.  What exposes hypocrisy in this case is that by 2020 Pakistan had achieved great success in implementing overwhelming majority of FATF recommendations meanwhile India was way behind in controlling its own money laundering and terror financing prevention measures. It also an open fact that India has been actively funding and assisting internationally recognized terrorist groups within Balochistan, despite all this India remains on whitelist and is among the members making the decisions. This hypocrisy is not only limited to India either, as it was leaked how some French firms had funded ISIS yet no action or statement on France was taken by FATF. Either way FATF is being used as a geopolitical tool and everyone needs to be aware of the fact when discussing anything related to it, as dealing with blacklisting threats does not simply require following recommendations but also building diplomatic support and countering false propaganda.

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