FATF blacklist

The FATF blacklist was the common shorthand description for the Financial Action Task Force list of "Non-Cooperative Countries or Territories" (NCCTs); that is, countries which it perceived to be non-cooperative in the global fight against money laundering and terrorist financing. Although non-appearance on the blacklist was perceived to be a mark of approbation for Offshore Financial Centres (or "tax havens") who are sufficiently well regulated to meet all of the FATF's criteria, in practice the list included countries that do not operate as offshore financial centres.

The FATF used to update the blacklist regularly, designating countries to be added or deleted.^[1] As of November 2009^[update], there are no officially listed NCCTs and hence the blacklist has become defunct.

The term "non-cooperative" was sometimes criticised as misleading, as a number of the countries which appeared on the list simply lacked the infrastructure or resources to cope with relatively sophisticated financial criminals who try to operate there.

Since 2008 the FATF has begun, at the behest of the G20 Leaders, a different and more analytical process of identifying countries and jurisidictions displaying strategic deficiencies in their anti- money laundering and anti-terrorist financing regimes.

History of the FATF blacklist (NCCT jurisdictions):

The first report

The plenary list was published in June 2000,^[2] and fifteen countries initially appeared on the list as being regarded as uncooperative in the fight against money laundering:

1.  Bahamas
2.  Cayman Islands
3.  Cook Islands
4.  Dominica
5.  Israel
6.  Lebanon
7.  Liechtenstein
8.  Marshall Islands
9.  Nauru
10.  Niue
11.  Panama
12.  Philippines
13.  Russian Federation
14.  Saint Kitts and Nevis
15.  Saint Vincent and the Grenadines

The initial list met much criticism from professionals experienced in the offshore sector. The designation of the Cayman Islands as non-cooperative was thought to be harsh,^[3] particularly as the 2000 report itself acknowledged that "the Cayman Islands has been a leader in developing anti-money laundering programmes throughout the Caribbean region. It has served as president of the Caribbean Financial Action Task Force, and it has provided substantial assistance to neighbouring states in the region. It has demonstrated co-operation on criminal law enforcement matters, and uncovered several serious cases of fraud and money laundering otherwise unknown to authorities in FATF member states."

The second report

In the second report, in 2001 (including a supplemental report in September) a further eight countries were designated as non-cooperative:

1.  Egypt
2.  Grenada
3.  Guatemala
4.  Hungary
5.  Indonesia
6.  Burma
7.  Nigeria
8.  Ukraine

The seventh report

The seventh list, published in June 2006,^[4] listed only the following country as non-cooperative:

1.  Burma

The eighth report

FATF's Eighth NCCT Review (Annual Review of Non-Cooperative Countries and Territories 2006–2007 dated 12 October 2007) listed no countries as non-cooperative.^[5] Myanmar (formerly Burma) was removed on 13 October 2006, Nauru on 13 October 2005 and Nigeria on 23 June 2006.^[6]

FATF issued a "Statement" on 25 February 2009 noting concerns and encouraging greater compliance by the following countries:^[7]

1.  Iran
2.  Pakistan
3.  Turkmenistan
4.  Uzbekistan
5.  São Tomé and Príncipe

"Counter measures"

Where the FATF feels that a country is not making sufficient to improve its regulation it may recommend "counter measures" against such countries. To date it has only done so against three countries: Myanmar, Nauru and Ukraine. However, counter measures have been withdrawn from all three, and as at July 2006 there are no counter measures in effect against any country.

OECD "gray list"

implementation of the internationally agreed tax standard

  substantially implemented the standard

  committed to the standard, but have not yet substantially implemented it

  have not committed to the standard (none)

  jurisdiction not monitored

Although its main focus is on tax crime, the OECD is also concerned with money laundering. Its work is designed to complement that carried out by the FATF.^[8] The OECD maintains a 'blacklist' of countries it considers uncooperative in the drive for transparency of tax affairs and the effective exchange of information, officially called "The List of Uncooperative Tax Havens". As of December 2009, no country is officially listed as a tax haven by the OECD.^[9]

On 22 October 2008, at an OECD meeting in Paris, 17 countries led by France and Germany decided to draw up a new blacklist of tax havens. The OECD has been asked to investigate around 40 new tax havens in the world where undeclared revenue is hidden and which host many of the non-regulated hedge funds that have come under fire during the 2008 financial crisis. Germany, France and other countries called on the OECD to specifically add Switzerland to a blacklist of countries which encourage tax fraud^[10]

The OECD gray list reports monitor the implementation of the internationally agreed tax standard in select jurisdictions – tax havens or other financial centers of interest. The list of jurisdictions is divided in three parts.^[11]

• substantially implemented the standard: Andorra, Anguilla, Antigua and Barbuda, Argentina, Aruba, Australia, Austria, The Bahamas, Bahrain, Barbados, Belgium, Belize, Bermuda, Brazil, British Virgin Islands, Brunei, Canada, Cayman Islands,^[12] Chile, China, Cook Islands, Cyprus, Czech Republic, Denmark, Dominica, Estonia, Finland, France, Germany, Gibraltar, Greece, Grenada, Guernsey, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, South Korea, Liberia, Liechtenstein, Luxembourg, Malaysia, Malta, Marshall Islands, Mauritius, Mexico, Monaco, Netherlands, Netherlands Antilles, New Zealand, Norway, Philippines, Poland, Portugal, Qatar, Russian Federation, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Samoa, San Marino, Seychelles, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, Turks and Caicos Islands, United Arab Emirates, United Kingdom, United States, US Virgin Islands
• committed to the standard, but have not yet substantially implemented it: Montserrat, Nauru, Niue, Panama, Vanuatu, Costa Rica, Guatemala, Uruguay, Hong Kong, Macao
• have not committed to the standard: none as of March 2011

See also

• Anti-money laundering
• Financial Action Task Force on Money Laundering
• Money laundering
• Offshore financial centre

References

1. ^ http://www.fatf-gafi.org/document/4/0,2340,en_32250379_32236992_33916420_1_1_1_1,00.html
2. ^ http://www.fatf-gafi.org/dataoecd/56/43/33921824.pdf
3. ^ Jeremy Hetherington-Gore (n.d.), The Cayman Islands – Paradise Regained?.
4. ^ [1]
5. ^ http://www.fatf-gafi.org/dataoecd/14/11/39552632.pdf
6. ^ http://www.fatf-gafi.org/dataoecd/14/11/39552632.pdf
7. ^ http://www.fatf-gafi.org/dataoecd/18/28/42242615.pdf
8. ^ http://www.oecd.org/document/39/0,3343,en_2649_33767_2499879_1_1_1_37427,00.html
9. ^ http://www.oecd.org/document/57/0,3343,en_2649_33745_30578809_1_1_1_1,00.html
10. ^ http://www.euronews.net/2008/10/21/calls-from-17-countries-for-new-tax-haven-blacklist/
11. ^ A PROGRESS REPORT ON THE JURISDICTIONS SURVEYED BY THE OECD GLOBAL FORUM IN IMPLEMENTING THE INTERNATIONALLY AGREED TAX STANDARD
12. ^ Bangkok Post,12.March 2010,p.B5]]

External links

• Current FATF "Non-Cooperative Countries and Territories"
• FATF's NCCT Timeline
• FATF's "Press related to Non-Cooperative Countries and Territories Initiative (NCCT)"
• FATF's "NCCTs FAQ"
• G7 warns dirty money states (BBC Article)
• Financial Action Task Force ("FATF") on Money Laundering World Compliance is a privately-held software company selling tools to combat money laundering
• FATF Publishes Blacklist & Greylist World-Check provides structured research and information that helps thousands of organisations combat financial crime and corruption.
• Most recent report