Context: The Financial Action Task Force (FATF) Private Sector Collaborative Forum (PSCF) 2025 will be held from 25th -27th March, 2025, in Mumbai.

Background: –

• The forum is being hosted by the Reserve Bank of India (RBI) and the Department of Revenue, Ministry of Finance, Government of India, reaffirming India’s responsible leadership in global efforts to combat money laundering and terrorist financing.

Key points

• The Financial Action Task Force (FATF) is an intergovernmental organization established to combat money laundering (ML), terrorist financing (TF), and other financial crimes at the global level.
• Established: 1989 (G7 Summit) to combat money laundering (ML).
• Headquarters: Paris, France.
• Membership: 39 countries (including India) + 2 regional organizations (EU, GCC).
• India became a member in 2010.

Key Functions of FATF

• Sets International Standards to combatant money laundering and terror financing
• Monitors Compliance:
  • Conducts Mutual Evaluations (peer reviews) of member countries.
  • Rates countries as Compliant (C), Largely Compliant (LC), Partially Compliant (PC), or Non-Compliant (NC).
• Identifies High-Risk Jurisdictions:
  • Grey List: Countries with strategic deficiencies (e.g., Pakistan, Syria).
  • Black List: Non-cooperative nations (e.g., North Korea, Iran).
• Issues reports on cryptocurrencies, hawala, and NGOs misused for terror funding.

FATF maintains two types of lists to monitor countries with weak AML/CFT laws:

• Grey List (Increased Monitoring List)
  • Countries placed here have deficiencies in AML/CFT measures but are cooperating with FATF.
  • These nations face economic scrutiny & restrictions from international financial institutions.
  • Example: Pakistan was on the Grey List (2018–2022).
• Black List (High-Risk Jurisdictions)
  • Countries that fail to curb money laundering & terror financing.
  • Severe economic sanctions & restrictions are imposed.
  • Current Blacklisted Countries: North Korea, Iran, Myanmar.

Source: PIB