FATF retains Pakistan on grey list, adds UAE

Context

The global financial watchdog Financial Action Task Force (FATF) has retained Pakistan on its grey list.

Other development

• The FATF included the United Arab Emirates (UAE), with which India signed a free trade agreement less than a month ago, in the list of jurisdictions requiring increased monitoring or the grey list. 
• The FATF excluded Zimbabwe from the list after a review found it compliant on all parameters.
• In all, there are 17 countries on the grey list. 

What is FATF?

• Established in: 1989 
• The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. 
• Aim: To combat money laundering, terrorist financing and other related threats to the integrity of the international financial system.
• The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. 
• As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
• Membership: The FATF currently has 39 members including two regional organisations
• the European Commission 
• Gulf Cooperation Council

What is meant by grey list?

• The 'grey list' means that a country gets limited access to international loans.
• Specifically, “it means the country has committed to resolving swiftly the identified strategic deficiencies within agreed timeframes and is subject to extra checks”. 
• Inclusion in the 'Grey List' implies "strategic deficiencies" detected in a jurisdiction's policies to prevent money laundering and terror financing.