The Financial Action Task Force (FATF) is a global watchdog established in 1989 to combat money laundering, terror financing, and proliferation financing by setting international standards and encouraging effective implementation of AML/CFT laws.
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[Music]
very good morning to all of you first of
all I'm extremely sorry for not being
able to post my video for a long time so
my sincere apologies I know lot of
people were waiting for my new videos I
was getting lot of requests
but my sincere apology was not being
able to make it the reason I was not
able to interact with all of you I was
just busy with creating something very
unique so I am forming uh some
certifications under the banner of
global Association of forensic
accountants short
gaffa I will be talking about gaffa it's
offering in terms of fin crime field
anti- money laundering cyber security
and fraud investigation in next few
videos but today as promised I'm here
once again to deal with your camps
related topics so guys me kamaljit cor
Sony once again here to deal with and
help you out with some more topics
related to Camp's exam
preparation it's been while that we have
connected but I'm sure your preparation
is going really well so let's start
today a topic which is quite an
important topic for
examination if you talk about any
Examination for anti-money
laundering one question which is almost
short short is asking about financial
action task force which is also known as
FFF so today we will be talking about
so today let's talk about
fatf financial action task
force this is something which is very
well tested in examination and also if
you are talking about a course like cams
or any other AML exam
it's very important for us to understand
what role FF plays when it comes to
dealing with money laundering Terror
funding and proliferation financing all
over the
world so today let's understand what
role Financial action task force or FF
plays when it comes to anti-money laundering
laundering
FF is a a global
Watchdog a very strong body I would say
which supports the entire globe in
tackling with a serious crime like money
laundering Terror funding and
financing Financial a task force came
into light back in 1989 in G7
Summit today is at it has about 40
members in
23 Russia was removed from the list so
we have 39 members of financial action
task force who are strongly supporting the
the
recommendations of
FF along with the member
countries Financial action task force
makes sure that all the countries have
very strong laws
technically and very effective
implementation of all the laws
regulation related to AML and
CFT as we have already
discussed money laundering and Terror
funding is a very very serious crime it
is not just about money it is much more
and much beyond that so the objective of
having FF is to combat money laundering
with the support of all countries who
are member and those country who are not
member of fatf they still have bodies
called the factive style Regional
bodies these bodies may not be member of
fatf however they are still supporting
in spreading the awareness about AML and
CFT worldwide
so let's talk about how FF plays that
prominent role before we move on and
discuss more about fatf's role please
note that this topic is quite an
important topic for examination so when
you prepare for your exam please prepare
well fatf originally had 40 member
countries if you look at fatf's website
however in 23 Russia was removed and
today we have 39 full members which
include 37 countries and two Regional
organization which includes European
commission and GCC so in total we have
39 member 37 plus two so one thing which
you have to keep in mind how many member
countries are
there then probably your book will also
discuss how will f have decide what
countes should be admitted as member or
how do they select the member or what is
the eligibility criteria for membership
so there are some quantitative as well
as qualitative
factors the quantitative Factor may
include the size of country their
population their GDP uh the size of
banking insurance and security Market
the qualitative food be what is the
impact of that country on the world so
these are few quantitative as well as
qualitative Factor basis which FF decide the
membership if countries are not part of
fatf as a member it does not mean that
they should not be worrying about AML or
CFT so fatf has nine
fsbs fatf style Regional bodies in short
we call it
fsbs there are
nine these are these make sure that they
will spread the word of fatf in the
world even those country who may not be
member of fatf they still should follow
the AML and CFT recommendation given by
fatf here it is very important for us to
note down whether fatf's recommendations
are mandatory to be followed or it is
like a
framework so fatf provides the
recommendation which works like a broad
framework when I say framework that
means one size does not fit
all every country is different their
laws their regulations their geographies
the population everything is different
so is their banking insurance and
securities the money businesses may vary
and that is where FF says that our
recommendation should be adopted in the
circumstances where the countries live
in so they can always
customize as per the need of the country
so fatf provides
framework correct so that's another
point which is important for us to
memorize and understand so far we
understood how fatf came into picture we
understood how many members fatf has and
countries though in examination it's not
very very frequent to ask the name of
the country but it is always good to
have a knowledge if you are studying AML
facts then these are name of fatf style Regional
Regional
bodies so as you can see it is spread
everywhere then these fsrb will go and
speak to their own members which will be
200 odd
countries even though they are not
direct member of FF they still have to
follow the recommendation of
FF the question comes to your mind that
why should country
follow country should follow because
it's not just in the interest of any
specific country or specific body it is
good for all the
countries which country will get
benefited from money laundering or which
country will get benefited from Terror
funding none
terrorism is not a problem of a country
terrorism is a problem of
word that is why fatf gives a strong
recommendation and strong actions are
taken against those countries who are
noncooperative not all kids are good so
is the
countries some kids are too good they
understand what fatf says however there
are some naughty kids around and we call
them noncooperative members or
non-cooperative countries I would say
non-cooperative member may not be the
right term so my apology let's put it as non-cooperative
countries now let me explain the concept
how FF you know really work and make
sure the countries listen to them talk
about ffs gray listing and black listing
so one of my favorite way to describe
this in a very simpler term and very lay
and term
is when we were growing up as a teenager
there may be a lot of chances where you
know our parents wanted us to do
something and we were like too naughty
to follow
that and then suppose you know your
parents have given you a warning that
don't do this this is wrong don't do
this this is
wrong some kids will be good they will
listen to the parents correct the
mistakes and come out as
cleaner however there may be certain
naughty kids who will say nothing doing
I'm not going to listen to
them then what parents used to
do parent used to block your cards block
the financing
now do whatever you want to do you will
not get any pocket money no credit cards
nothing now let me try and convert that
basic example to gry listing and black
listing this is just for reference
purpose and understanding
purpose so FF reviews countries time to
time they have technical reviews as well
as effective reviews of countries
if fatf realize that country's current
laws regulation or the implementation of
AML may not be as per standards or it
has lot of loopholes or
weaknesses those country will be put in
in the list called gray listing gray
listing is like I'm watching you so FF
time to time review the countries and
put them in a list and say hey your
current AML CFT process are
not at particular standard it's time for
you to amend
it the good countries will listen to
FF will amend all their laws regulation
and will make sure the country comes out
of gray listing soon so gray listing
countries are those countries which are
under review and fatf and the members
are watching them
closely but as I said not all countries
are that good some says nothing doing we
will not have a strong AML CFT
compliances or it may also possible that
those country may be supporting money
laundering or Terror funding in some or other
other
manner not acceptable
then those naughty kids are putting in The
The
Blacklist and that's called ffs
blacklisting so blacklisting means those
country will be putting in a high risk
country and all the banks worldwide will
be very cautious with dealing with those
people who belong to highrisk
countries so far there are three
countries which are put in in the
Blacklist Iran myamar and North
Korea these three countries are part of
black listing apart from that there are
many list many many countries which are
there in the gray list however some
countries are out of gray listing when
they implemented a very strong AML
process in the country so it's up to the
country from gry list they want to go
and go into black listing or they have
an option to move out of gy list and
become a cleaner
country the question which comes to our
mind is what will happen if I become
Blacklist what did I say what if you do
not listen to your perod your finances
are cut to begin with and then of course
there'll be sanctions there'll be lot of
punishments so similarly the countries
which are
blacklisted will not get financial
support from un IMF or other
countries they may also get into severe
sanctions countries exports will be
restricted other countries who are
supporting AML and CFT may not like to
deal with those countries much
overall it's very strict armed
twisting why FF does it because that's
the only way through which they can make
them a good
child the country has to have a strong
AML CFT process in place and if they
don't have it they should be definitely
punished for it so that is the concept
of gry listing and black listing I'm
sure with this basic example you would
have understood it and it's not
something something which you will be
forgetting soon now Mark it as important
for examination when you prepare for
your exam do study about gry listing and
well so as we discussed what happens if
the country becomes Blacklist there will
be public statement why fatf publish the
list of gy list and Blacklist countries
for two reason one once their name are
published they get some pressure on them
because everybody's watching them second
worldwide the financial institution will
be careful dealing with those countries
or those Nationals or those companies
who may belong to highrisk
countries that's the reason fatf make that
that
public then there will be increased
scrutiny Economic Consequences as we
discussed Financial pressure you know a
lot of restrictions on
exports of course reputational IM
damage if a country gets into
blacklisting it's not a great thing for
them then pressure to
reform there's always a scope of
improvement just because a country has
come into Blacklist it does not mean
they can never come out of it if they
really want they can come out of it very
very soon
soon that is where the listing gray
listing and black listing of fatf puts
pressure on the country to have strong
amln CFT in hand so that was about the
you know the gry listing and black
listing of
FS as we discussed these are the
blacklisted countries so far Democratic
People's Republic of Korea
Iran and myamar myamar is a recent you know
Edition then comes famous 40
recommendation by FBF which is given in
your book if you want to study more
about fatf's recommendation you can
always log to website of fatf all those
40 recommendations are mentioned quite in
in
detail from examination perspective they
may not ask very very in-depth question
question on recommendation but my strong
suggestion that you do study it they may
or may not test however you should
certainly know in AML process so most of
the 40 recommendation are related to
international corporation when it comes
to AML it talks about the due diligences
which are adopted by financial institute
it talks about the laws and regulation
in the country related to AML CFT it
also talk about preventive measure
beneficial ownership and what and who
are the competent authorities who can
deal with the matter of money laundering
for example in India we have Financial
intelligence units FIU so fius are the
one who gets reporting from financial
institute and if they find any case
which is suspicious for money laundr
they further investigate so similarly
fatf talks about who has the power and
responsibility who are the competent
authorities when it comes to money
laundering the 40 recommendation of FF
are very important for us to know so
please do read that in
detail these are this is a snapshot of
so they have different sections for
examination perspective please read them
even if you read them broadly but do
read it don't skip
it then comes ff's Mutual
evaluation few minutes back we were
talking about GRE listing and
blacklisting then the question arise as
to how will they get to know that what
is happening in the country so for that
FF does mutual
evaluation it is indepth due diligence
of country to check if the country has a
strong AML and CFT process in place or
not there are two ways through which
evaluation happens one is technical
second is
effective technical evaluation includes
the eval uation of laws regulation
policies and
procedure in order to have a technical
evaluation FF team will not have a
physical presence in that country so
before they plan the trip to that
country the fatf team they do technical
review of the country they check their
laws regulation
recommendation what how are they trying
to combat money laundering in their country
country
if they have any comment if FF team has
any comment they'll go back and give it
to the country so this happened before
they physically you know appear in that
country but sometime on paper the laws
looks very nice it is equally important
to know are these laws regulation are
being followed or not so for that FF
team does effective evaluation
in simpler term what is effective
evaluation where they will really see
our bank doing due diligence in right
manner are their Sops and policies good
enough to deal with a you know money
laundering and Terror
funding so that basically Effectiveness
is to check whether the technical thing
is on ground reality or not or is it
just on the paper in order to check
Effectiveness they don't do it virtually
they come in that country do that
evaluation and then they give their
report in couple of
months for India this evaluation
happened last in November
2023 most probably by June the report
will be out similarly it happens to all the
the
countries you know in a sequence if you
look at ff's website it has a section
which says that what all countries are
due for evaluation so this is how FF
evaluate the
countries this is a process if you want
to understand in depth what is the
evaluation process this is what
is so guys that was about
about
fatf though there are lot of other
things which you should know about it
but for examination perspective even if
you cover these broad points you're
prepared for exam my
suggestion that if you will be preparing
the legal site of uh for AML especially
for camps exam there many many
regulators and many bodies are mentioned
for example basil committee's
recommendation un fatf egbon group and
mostly students find it very confusing
and difficult so one suggestion that
prepare this chapter at the
last just before you are planning to
appear for exam why I'm saying so
because it's hard code Theory and it has
to be
remembered if you will prepare this
topic before and then plan the exam
after like a month it's going to be
really difficult to retain that knowledge
knowledge
even first read should be before the
exam but the last reading should be just
before the exam so that it's fresh in
the mind secondly some bodies are more frequently
frequently
tested when FF is one of them for sure
so by
no no chance you are skipping that for
exam so that was my take on this
particular topic of
fats also before I say bye to all my
audience today in between I was getting
lot of queries where people were asking
about the study notes Etc so just for
that V at capage provides the entire
study material for Camp's exam
preparation which includes my video
lectures which includes the chapterwise
notes as you can see right on your
screen it also include the chapter wise
practice question as well as mock
examinations if you want to subscribe
for it you can reach out to us
at info atonline Global career.com
or maybe you can just request the
details in our YouTube channel either
ways my team will touch base with you
and support you with that so with this I
would like to say thank you so much for
being with me once again and sorry once
again that I was not able to interact
with you but I'm I will try my level
best to be as interactive and as
frequent as I can be with you so with
this thank you so much take care and I
wish you all the best for your
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