FATF Blacklist
Encyclopedia
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 Centre
s (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. , 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.
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, 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."
2006–2007 dated 12 October 2007) listed no countries as non-cooperative. Myanmar (formerly Burma) was removed on 13 October 2006, Nauru on 13 October 2005 and Nigeria on 23 June 2006.
FATF issued a "Statement" on 25 February 2009 noting concerns and encouraging greater compliance by the following countries:
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
The OECD gray list reports monitor the implementation of the internationally agreed tax standard in select jurisdictions – tax haven
s or other financial centers of interest. The list of jurisdictions is divided in three parts.
reviews and issues reports on compliance of its member tax jurisdictions. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2).
As of November 2011 the phase 1 or combined (phases 1&2) reviews of 59 jurisdictions are completed. The final phase 2 review is expected to be finalized in the first half of 2014.
Of the completed reviews the following jurisdictions aren't ready for phase 2: Antigua and Barbuda, Barbados, Brunei, Botswana, Liechtenstein, Panama, Seychelles, Switzerland, Trinidad and Tobago, Uruguay and Vanuatu.
Money laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
and terrorist financing
Terrorist Financing
Terrorist financing came into limelight after the events of terrorism on 9/11. The US passed the USA PATRIOT Act to, among other reasons, attempt thwarting the financing of terrorism and anti-money laundering making sure these were given some sort of adequate focus by US financial institutions...
. Although non-appearance on the blacklist was perceived to be a mark of approbation for Offshore Financial Centre
Offshore financial centre
An offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....
s (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. , 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.
The first report
The plenary list was published in June 2000, and fifteen countries initially appeared on the list as being regarded as uncooperative in the fight against money laundering:
The Bahamas
Cayman Islands
Cook Islands
Dominica
Israel
Lebanon
Liechtenstein
Marshall Islands
Nauru
Niue
Panama
Philippines
Russia
Saint Kitts and Nevis
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, 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:
The seventh report
The seventh list, published in June 2006, listed only the following country as non-cooperative:The eighth report
FATF's Eighth NCCT Review (Annual Review of Non-Cooperative Countries and Territories2006–2007 dated 12 October 2007) listed no countries as non-cooperative. Myanmar (formerly Burma) was removed on 13 October 2006, Nauru on 13 October 2005 and Nigeria on 23 June 2006.
FATF issued a "Statement" on 25 February 2009 noting concerns and encouraging greater compliance by the following countries:
"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"
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. 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.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
The OECD gray list reports monitor the implementation of the internationally agreed tax standard in select jurisdictions – tax haven
Tax haven
A tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....
s or other financial centers of interest. The list of jurisdictions is divided in three parts.
- 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, Chile, China, Cook Islands, Costa Rica, Cyprus, Czech Republic, Denmark, Dominica, Estonia, Finland, France, Germany, Gibraltar, Greece, Grenada, Guernsey, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, South Korea, Liberia, Liechtenstein, Luxembourg, Macao, Malaysia, Malta, Marshall Islands, Mauritius, Mexico, Monaco, Montserrat, Netherlands, Netherlands Antilles, New Zealand, Norway, Panama, 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, Vanuatu
- committed to the standard, but have not yet substantially implemented it: NauruNauruNauru , officially the Republic of Nauru and formerly known as Pleasant Island, is an island country in Micronesia in the South Pacific. Its nearest neighbour is Banaba Island in Kiribati, to the east. Nauru is the world's smallest republic, covering just...
, NiueNiueNiue , is an island country in the South Pacific Ocean. It is commonly known as the "Rock of Polynesia", and inhabitants of the island call it "the Rock" for short. Niue is northeast of New Zealand in a triangle between Tonga to the southwest, the Samoas to the northwest, and the Cook Islands to...
, GuatemalaGuatemalaGuatemala is a country in Central America bordered by Mexico to the north and west, the Pacific Ocean to the southwest, Belize to the northeast, the Caribbean to the east, and Honduras and El Salvador to the southeast...
, UruguayUruguayUruguay ,officially the Oriental Republic of Uruguay,sometimes the Eastern Republic of Uruguay; ) is a country in the southeastern part of South America. It is home to some 3.5 million people, of whom 1.8 million live in the capital Montevideo and its metropolitan area... - have not committed to the standard: none as of November 2011
Global forum compliance
The Global Forum on Transparency and Exchange of Information for Tax PurposesGlobal Forum on Transparency and Exchange of Information for Tax Purposes
The Global Forum on Transparency and Exchange of Information for Tax Purposes has been the multilateral framework within which work in the area transparency and exchange of information has been carried out by both OECD and non-OECD economies since 2000....
reviews and issues reports on compliance of its member tax jurisdictions. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2).
As of November 2011 the phase 1 or combined (phases 1&2) reviews of 59 jurisdictions are completed. The final phase 2 review is expected to be finalized in the first half of 2014.
Of the completed reviews the following jurisdictions aren't ready for phase 2: Antigua and Barbuda, Barbados, Brunei, Botswana, Liechtenstein, Panama, Seychelles, Switzerland, Trinidad and Tobago, Uruguay and Vanuatu.
See also
- Anti-money laundering
- Financial Action Task Force on Money LaunderingFinancial Action Task Force on Money LaunderingThe Financial Action Task Force , also known by its French name, Groupe d'action financière , is an intergovernmental organization founded in 1989 on the initiative of the G7. The purpose of the FATF is to develop policies to combat money laundering and terrorist financing...
- Money launderingMoney launderingMoney laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
- Offshore financial centreOffshore financial centreAn offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....