[Answered] Analyse the role and effectiveness of FATF (Financial Action Task Force) in combating the financing of terrorism.

The Financial Action Task Force (FATF) is an inter-governmental body which was established to promote effective implementation of legal and regulatory measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. It is a policy-making body which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

Role of FATF in combating terrorism financing:

1. Set standards: The FATF is the global standard-setter for combating money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction (WMD).
2. Protection: The role of the FATF is to protect the integrity of the financial system, and enhance its transparency, which contribute towards global security.
3. Studies: The FATF conducts and publishes expert operational and strategic studies on risks, trends, and methods. It also develops and sets global policies, standards, best practice, and guidance.
4. Evaluation: It evaluates FATF member countries and oversees in close cooperation with the FATF-style regional bodies.
5. Coordination: The FATF has developed a series of recommendations that are recognised as the international standard. They form the basis for a co-ordinated response to these threats to the integrity of the financial system and help ensure a level playing field. 
6. Monitoring: The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures. 
7. Identify vulnerabilities: In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.

Effectiveness of FATF:

1. Pressure: The effect of the FATF Blacklist has been significant, and has proven more important in international efforts against money laundering than has the FATF Recommendations. While, under international law, the FATF Blacklist carried with it no formal sanction, in reality, a jurisdiction placed on the FATF Blacklist often found itself under intense financial pressure.
2. Awareness: Over a period of time the FATF has gained credibility as a professional organisation, which has succeeded in not only increasing awareness regarding the challenges being faced by the global financial system, but also human security issues like terrorism.
3. Money laundering: The FATF has been at the forefront of international efforts to fight money laundering and combating finance to terrorism. Its efforts have been in conjunction with relevant resolutions of the United Nations Security Council (UNSC).
4. Investigation: Terrorist financing investigation and prosecution ensures that terrorist financing offences and activities are investigated and persons who finance terrorism are prosecuted and subject to effective, proportionate and dissuasive sanctions.
5. Terrorist financing: FATF makes sure funds are not easily accessible by terror organizations that are causing these crimes against humanity. FATF has become one of the major factors for countries like Pakistan being pressured to take requisite action against terrorists operating from its soil.
6. Corruption: FATF has helped to fight against corruption by ‘grey-listing’ countries that do not meet Recommended Criteria and this helps to cripple economies and states that are aiding terrorist and corrupt organizations.
7. Cooperation: Building international cooperation is vital for success, of course. The FATF has intensified co-operation with bodies such as the United Nations, the IMF, the World Bank and the G-20 Finance Ministers and Central Bank Governors.

Thus FATF played an import role of acting as a standard body to put pressure on terrorism funding and money laundering. Any blacklisting of a country cuts the lifeline of terrorist activity supported by the state through blockage of funds. Thus FATF act as a pressure group helping in combating terrorism and money laundering.

Listing by FATF:

• Grey List: Countries that are considered a safe haven for supporting terror funding and money laundering are put in the grey list. This inclusion serves as a warning to the country that it may enter the blacklist.
• Black List: Countries known as Non-Cooperative are put in the blacklist. These countries support terror funding and money laundering activities. The FATF revises the blacklist regularly adding or deleting entries