Why in News?
India has been accorded the Vice Presidency of the Financial Action Task Force (FATF) for the first time. Vivek Aggarwal, India’s nominee, has been appointed as the FATF Vice President — a landmark in India’s growing role in global financial governance.
Key Facts for Prelims: FATF
- Established: 1989 at the G7 Summit in Paris
- Nature: Independent, inter-governmental policy-making body (not a UN agency, not an enforcement body)
- Secretariat: Housed at OECD Headquarters, Paris
- Membership: 40 members — 38 jurisdictions + 2 regional organizations (European Commission + Gulf Cooperation Council)
- Decision-making: Via FATF Plenary, meets thrice a year (February, June, October) — decisions by consensus
Mandate Evolution (Critical for Prelims)
- 1989: Anti-Money Laundering (AML) only
- 2001: Expanded to Counter Financing of Terrorism (CFT)
- 2012: Expanded to Counter Proliferation Financing (CPF) — related to WMDs
Quick Revision Table: FATF Grey List vs Black List
| Aspect | Grey List | Black List |
|---|---|---|
| FATF Term | Jurisdictions under Increased Monitoring | High-Risk Jurisdictions Subject to Call for Action |
| Meaning | Strategic AML/CFT deficiencies but working with FATF | Serious deficiencies, significant risk to global finance |
| FATF Approach | Monitoring and assistance | Strong countermeasures encouraged |
| Economic Impact | Higher transaction costs, reduced investor confidence | Severe restrictions on international trade and finance |
| Finance Access | Available with enhanced due diligence | Highly restricted; banks may avoid altogether |
Trap / Confusing Points
| Confusion | Correct Fact |
|---|---|
| FATF is a UN body | FATF is independent, not a UN agency (Secretariat is at OECD, Paris) |
| FATF Plenary meets monthly | Meets thrice a year — Feb, Jun, Oct |
| Grey List = punishment like Black List | Grey list = country is cooperating; Black list = non-cooperative with severe risks |
| FATF mandate since inception includes terrorism | Terrorism financing added only in 2001 |
| FATF Membership = 40 countries | 40 members = 38 jurisdictions + 2 regional orgs |
Practice MCQs
1. FATF was established during which summit?
a. G20 Summit
b. G7 Summit
c. ASEAN Summit
d. NAM Summit
Ans: B
FATF was established in 1989 during the G7 Summit in Paris.
2. FATF Plenary meets how many times per year?
a. Once
b. Twice
c. Thrice
d. Four times
Ans: C
FATF Plenary meets thrice a year — February, June, and October.
3. When did FATF expand its mandate to include Counter Proliferation Financing?
a. 1989
b. 2001
c. 2008
d. 2012
Ans: D
FATF expanded to CPF (WMD proliferation financing) in 2012.
4. Where is the FATF Secretariat located?
a. UN Headquarters, New York
b. IMF Headquarters, Washington D.C.
c. OECD Headquarters, Paris
d. World Bank, Washington D.C.
Ans: C
FATF Secretariat is housed at the OECD Headquarters in Paris.
5. Which two regional organizations are FATF members?
a. ASEAN and African Union
b. European Commission and Gulf Cooperation Council
c. SAARC and European Union
d. BRICS and SCO
Ans: B
FATF’s 40 members include 38 jurisdictions + European Commission and Gulf Cooperation Council.
To learn current affairs from exam point of view, Click here.
To know more about FATF, Click here.
