FATF suspends membership of Russia

Subject : International Relation

Section : International Organizations

Concept :

Financial Action Task Force (FATF) has suspended Russia’s membership over Moscow’s invasion of Ukraine.
The move marks the first suspension of a country from the Financial Action Task Force.
In a statement, it said that Russia’s actions are completely in violation of FATF core principles aiming to promote security, safety, and the integrity of the global financial system.
The FATF identified Russia’s involvement in the arms trade and malicious cyber-activities, as well as evasion activities.
The suspension comes after a campaign by Ukraine for FATF to add Russia to the FATF blacklist.
Implications :
- The suspension of Russia means Russia can no longer attend the group’s meetings both physically and virtually and can no longer access FATF documents. However, Russia remains accountable for implementing FATF’s anti-money-laundering standards.
- Russia since June 2022 has been restricted from holding any leadership or advisory roles or participating in decision-making on standard-setting, peer-review processes, and governance and membership issues.
Note : On February 24, FATF also added Nigeria and South Africa to its ‘grey list’, while removing Morocco and Cambodia from the list.

About Financial Action Task Force (FATF):

FATF is an inter-governmental policy-making and standard-setting body dedicated to combating money laundering and terrorist financing.
Objective: To establish international standards, and to develop and promote policies, both at national and international levels, to combat money laundering and the financing of terrorism.
It was established in 1989 during the G7 Summit in Paris to develop policies against money laundering.
In 2001 its mandate expanded to include terrorism financing.
Headquarters: Paris, France.
FATF members include 39 countries, including the United States, India, China, Saudi Arabia, Britain, Germany, France, and the EU as such.
India became a member of FATF in 2010.

FATF has 2 types of lists:

Black List:
Countries knowns as Non-Cooperative Countries or Territories (NCCTs) are put on the blacklist. These countries support terror funding and money laundering activities. The FATF revises the blacklist regularly, adding or deleting entries.
Three countries North Korea, Iran, and Myanmar are currently in FATF’s blacklist.
Grey List:
Countries that are considered a safe haven for supporting terror funding and money laundering are put on the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.
United Arab Emirates (UAE), Turkiye, Jordan, South Africa and 20 other nations are in its ‘Grey List’

Consequences of being on the FATF blacklist:

No financial aid is given to them by the International Monetary Fund (IMF), the World Bank, the Asian Development Bank (ADB) and the European Union (EU).
They also face a number of international economic and financial restrictions and sanctions.