Financial Action Task Force (FATF)
International Relations
- PYQs7
- Articles1
Background
FATF plays a crucial role in global financial governance, impacting international financial flows and national security. India's active participation and leadership roles (like the Vice-Presidency) highlight its commitment to combating financial crimes and its growing influence in multilateral forums.
The Financial Action Task Force (FATF) is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. In 2001, its mandate was expanded to include combating terrorist financing.
Facts & tables
- Purpose
- Sets international standards to prevent illegal activities like money laundering and terrorist financing.
- Origin
- Established by the G7 summit in Paris in 1989.
- Functions
- Monitors countries' progress in implementing FATF Recommendations, identifies jurisdictions with strategic deficiencies (grey/black lists).
- Membership
- Over 200 countries and jurisdictions are committed to FATF standards.
| Type | Reference |
|---|---|
| Conceptual area | International Relations |
| Body | Role |
|---|---|
| Financial Action Task Force (FATF) | Sets standards and monitors compliance |
Prelims angle
Prelims angle: Multi-statement analysis
Prelims angle: Factual recall
- Intergovernmental body established by G7 in 1989.
- Mandate: Combat money laundering (ML) and terrorist financing (TF).
- Sets international standards (FATF Recommendations).
- Monitors compliance and identifies high-risk jurisdictions (grey/black lists).
- India is a member and plays an active role.
Treaty = agreement between states; body = institution.
| Year | Framing tags |
|---|---|
| 2025 | Multi-statement analysis, Institutional roles and functions |
| 2024 | Multi-statement analysis, Factual recall |
| 2023 | Multi-statement analysis, Factual recall |
| 2022 | Factual recall, Institutional roles and functions |
| 2016 | Statement-based questions, Conceptual understanding |
| 2016 | Statement-based questions, Factual recall |
| 2016 | Factual recall, Institutional roles and functions |
Timeline
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International Relations
Conceptual area
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Prelims 2016
Statement-based questions, Conceptual understanding
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Prelims 2016
Statement-based questions, Factual recall
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Prelims 2016
Factual recall, Institutional roles and functions
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Prelims 2022
Factual recall, Institutional roles and functions
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Prelims 2023
Multi-statement analysis, Factual recall
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Prelims 2024
Multi-statement analysis, Factual recall
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Prelims 2025
Multi-statement analysis, Institutional roles and functions
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Vivek Aggarwal appointed Financial Action Task Force vice-president
The FATF is a global watchdog against money laundering and terrorist financing, setting international standards and evaluating countries' compliance, with India playing an increasingly significant role.
See also
Past papers
2016–2025 · 6 questions
In the news
Vivek Aggarwal appointed Financial Action Task Force vice-president
The FATF is a global watchdog against money laundering and terrorist financing, setting international standards and evaluating countries' compliance, with India playing an increasingly significant role.
Try these PYQs
Consider the following statements about G-20:
1. The G-20 group was originally established as a platform for the Finance Ministers and Central Bank Governors to discuss the international economic and financial issues.
2. Digital public infrastructure is one of India's G-20 priorities.
Which of the statements given above is/are correct?
* Both statements about the G-20 are correct * Statement 1 is correct: The G-20 originated as a forum for Finance Ministers and Central Bank Governors to address global economic and financial issues. It has since expanded its focus to other areas of international cooperation. * Statement 2 is correct: India, as the chair of the G-20 in 2023, prioritised digital public infrastructure as one of its key areas of focus. This included discussions on promoting responsible use of artificial intelligence, bridging the digital divide, and fostering inclusive growth through digitalization.
Which of the following statements about 'Exercise Mitra Shakti-2023' are correct?
1. This was a joint military exercise between India and Bangladesh.
2. It commenced in Aundh (Pune).
3. Joint response during counter-terrorism operations was a goal of this operation.
4. Indian Air Force was a part of this exercise.
Select the answer using the code given below :
* Statement 1 is incorrect: Exercise MITRA SHAKTI-2023 was a joint military exercise between India and Sri Lanka. * Statement 2 is correct: The ninth edition of Joint Military exercise “Exercise MITRA SHAKTI-2023” commenced in Aundh (Pune). * Statement 3 is correct: The Scope of the exercise includes synergizing joint responses during counter-terrorist operations. * Statement 4 is correct: 15 personnel from Indian Air Force and five personnel from Sri Lankan Air Force participated in the exercise.
With reference to the International Monetary and Financial Committee (IMFC), consider the following statements:
1. IMFC discusses matters of concern affecting the global economy and advises the International Monetary Fund (IMF) on the direction of its work.
2. The World Bank participates as an observer in IMFC’s meetings.
Which of the statements given above is/are correct?
Statement 1 is Correct: The International Monetary and Financial Committee (IMFC) serves as a vital forum for discussing global economic issues and providing guidance to the International Monetary Fund (IMF). It brings together finance ministers, central bank governors, and other high-level officials from member countries to discuss challenges and opportunities facing the global economy. They also advise the IMF on its policy direction and work program. Statement 2 is Correct: The World Bank, while a separate institution, collaborates closely with the IMF. While not a formal member of the IMFC, the World Bank typically participates as an observer in IMFC meetings. This allows for better coordination and exchange of information between the two institutions on matters of mutual interest, such as global economic stability and development. Hence, option C is the correct answer.
Consider the following statements with reference to ‘IFC Masala Bonds’ -
1. The International Finance Corporation, which offers these bonds, is an arm of the World Bank.
2. They are the rupee-denominated bonds and are a source of debt financing for the public and private sector.
Select the correct answer using the code given below.
Statement 1 is Correct. The International Finance Corporation (IFC) is indeed an arm of the World Bank Group, a group of five international organizations that work together to fight poverty and promote sustainable development. The IFC specifically focuses on encouraging growth in the private sector of developing countries. Statement 2 is Correct. Masala bonds are rupee-denominated bonds issued by foreign entities (public or private sector) outside of India. These bonds raise capital for the issuer in Indian rupees, providing an alternative funding source. Therefore, the correct answer is 1 and 2 both are correct.
Consider the following statements in respect of the International Bank for Reconstruction and Development (IBRD):
I. It provides loans and guarantees to middle income countries.
II. It works single-handedly to help developing countries to reduce poverty.
III. It was established to help Europe rebuild after the World War II.
Which of the statements given above are correct?
The International Bank for Reconstruction and Development (IBRD) is a key arm of the World Bank Group, originally created for post-war reconstruction and now focused on development in middle-income nations. ✅ Statement I: Correct The IBRD provides loans and guarantees to middle-income and creditworthy low-income countries. ❌ Statement II: Incorrect The IBRD does not work single-handedly; it collaborates with other arms of the World Bank Group like IDA, IFC, etc. ✅ Statement III: Correct It was established in 1944 to help Europe rebuild after World War II.
Show 2 more PYQs
Rapid Financing Instrument and "Rapid Credit Facility" are related to the provisions of lending by which one of the following?
Both Rapid Financing Instrument (RFI) and Rapid Credit Facility (RCF) are lending facilities offered by the International Monetary Fund (IMF) to member countries facing urgent balance of payments needs. Rapid Financing Instrument (RFI): This is available to all IMF member countries. Rapid Credit Facility (RCF): This is a concessional lending facility specifically for low-income countries (LICs) that are members of the Poverty Reduction and Growth Trust (PRGT).
‘Global Financial Stability Report’ is prepared by the -
The 'Global Financial Stability Report' is prepared by the International Monetary Fund (IMF). The Global Financial Stability Report is a semiannual report published by the IMF that assesses the stability of the global financial system and emerging market financing. It highlights potential risks and vulnerabilities in the financial system and provides policy recommendations to promote financial stability.