FATF Updates Criteria to Target High-Risk Nations in Financial System
The Financial Action Task Force (FATF) has announced significant changes to its criteria, focusing on nations that pose greater risks to the international financial system. These changes aim to better target such nations and provide more support to low-capacity countries.
FATF’s New Criteria
The FATF’s revised criteria prioritize jurisdictions for review if they meet certain conditions: being an FATF member, appearing on the World Bank High-Income Countries list (excluding those with a small financial sector), or having financial sector assets above USD 10 billion. Least developed countries will not be prioritized unless they pose significant risks, and they may receive a longer observation period to address issues.
Impact on Least Developed Nations
Illicit financial flows, such as those from tax evasion and corruption, significantly impact least developed nations by diverting funds from essential services like education and health. The FATF aims to help these countries build stronger economies by depriving criminals of their illegal gains.
FATF Grey List
The FATF grey list identifies countries with strategic deficiencies in their anti-money laundering and counter-terrorist financing systems. Nations on this list, including Bulgaria, Kenya, and Vietnam, work with experts to address these gaps.
Doubts Revealed
FATF -: FATF stands for Financial Action Task Force. It is an international organization that works to prevent illegal activities like money laundering and terrorism financing by setting standards for countries to follow.
High-Risk Nations -: High-risk nations are countries that might have problems in their financial systems, making them more likely to be involved in illegal activities like money laundering or terrorism financing.
International Financial System -: The international financial system is like a big network that connects banks and financial institutions around the world, allowing them to do business with each other.
Low-Capacity Countries -: Low-capacity countries are nations that might not have enough resources or strong systems to effectively manage and regulate their financial activities.
Grey List -: The grey list is a list made by FATF that includes countries with some problems in their financial systems. These countries need to make improvements to avoid being involved in illegal financial activities.
Bulgaria and Kenya -: Bulgaria and Kenya are two countries mentioned as examples of nations on the FATF grey list, meaning they have some issues in their financial systems that need fixing.
