FATF Current Affairs - 2019
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Saudi Arabia has become 1st Arab country to be granted full membership of Financial Action Task Force (FATF) following FATF’s Annual General Meeting held in Orlando, Florida in United States (US).
Saudi Arabia and FATF
Background: Since November 2004, Saudi Arabia has been a founding member of Middle East and North Africa (MENA) arm of FATF group. At the beginning of 2015 Saudi Arabia had received an invitation from FATF as an observer member.
Now, the kingdom’s accession came as global money laundering watchdog celebrated 30th anniversary of its 1st meeting held in Paris (France) in 1989.
The full membership to Saudi Arabia comes after it was reported that Kingdom had made tangible progress for its efforts in implementing FATF’s guidelines.
What is FATF?
It was established in 1989, with headquarters in Paris, France.
Members: FATF comprises of 37-member jurisdictions and 2 Regional Organisations namely Gulf Cooperation Council (GCC) and European Commission (EC). With kingdom becoming a FATF member, the number of permanent members in group is now 39.
FATF Plenary: is FATF’s decision making body. It meets three times per year.
Function: The Financial Action Task Force is an international group responsible for issuing international standards, policies and best practices for combating money laundering, terrorist financing and proliferation and other related threats to integrity of international financial system.
Recent Developments: FATF has notified that Pakistan failed to complete its action plan on terror financing and has strongly urged Pakistan to swiftly complete its action plan by October 2019 or else face consequences.
The United Nations Security Council (UNSC) has unanimously adopted a French-drafted resolution which ordered countries worldwide to step up the fight against terrorism financing by ensuring they have laws that make it a serious crime to fund terrorist acts.
- This resolution is the first stand-alone measure dedicated specifically to counter the financing of terrorism.
- The resolution asks the states to ensure that their domestic laws and regulations establish serious criminal offences to prosecute those who collect funds or provide economic resources to terrorist organizations.
- The resolution urges countries to establish financial intelligence units to strengthen efforts to counter terrorism financing and to share information on their investigations.
- The resolution will help the FATF to mount pressure on more than 50 countries to pass new legislation on countering terror financing.
The UNSC has adopted resolution for sanctions to choking off the revenue to the Islamic State jihadist group and Al-Qaeda-linked fighter. The resolution encompasses in one text various initiatives contained in a range of resolutions.
How the resolution will aid in curbing terror activities?
Since the binding resolution was drafted under chapter 7 of the UN Charter it can be enforced with sanctions. This will force the nations to act.
The recent attacks like the Pulwama Terror Attack has shown that terror groups have access to financial flows through legal and illegal means. The resolution takes a step in curbing the inflows to the terrorist groups.
FATF notes that less than a fifth of countries were applying laws that prosecute suspected terror financiers as criminals. The resolution aims to change that.
The resolution would also contribute to halting ransom payments for kidnappings by terror groups, which have become a major source of funding.