Why FATF should blacklist and suspend Israel’s membership

Israel has been pounding Gaza since October. Picture: Said Khatib / AFP

Israel has been pounding Gaza since October. Picture: Said Khatib / AFP

Published Feb 19, 2024


Zakhele Hlophe

The Financial Action Task Force (FATF) is gearing up for its upcoming plenary meeting on February 19. As the international body known for regulating the combat against money laundering, terrorist financing, and weapons proliferation, it is crucial for FATF not to overlook the Israel-Palestinian tragedy.

The conflict has resulted in a significant human toll, claiming over 28,000 lives and leaving close to 68,000 injured since October 7. The FATF must take decisive measures akin to those applied in the case of Russia during its invasion of Ukraine.

The FATF, head-quartered in Paris, plays a pivotal role in overseeing global efforts to combat financial crimes and terrorism. Notably, it greylisted South Africa in February last year, the same time that it suspended Russia’s membership, for deficiencies in its anti-money laundering and counter-financing of terrorism (AML/CFT) framework.

The organisation is renowned for its peer review mechanisms, which lead the improvements in the adoption of the global AML/CFT standards, to the greyisting or blacklisting of countries that fail to comply with these standards.

As the Russia-Ukraine conflict unfolded two years ago, FATF articulated its stance, expressing concerns about its impact on the international financial system. In March 2022, FATF issued a public statement expressing deepest sympathies with the people of Ukraine and condemning the substantial loss of life. This statement reaffirmed the commitment of FATF ministers (of finance of member countries) to implement and support FATF Standards, emphasising that the ongoing Russian invasion ran counter to the core principles of the organisation.

Subsequent statements in April 2022, focused on swift and decisive action to enhance the effectiveness of measures against money laundering and terrorism financing in light of the conflict.

In June 2022, FATF expressed deep sympathies with the people of Ukraine and announced severe restrictions on the Russian Federation’s role and influence within FATF. This unprecedented move stripped Russia of leadership and advisory roles and prohibited its participation in decision-making processes. It marked the first instance of FATF taking such a stance against a member country.

In February 2023, marking a year since Russia’s incursion into Ukraine, FATF took the decisive step of suspending Russia’s membership, showcasing the organisation’s dedication to maintaining principles even amid global turmoil.

The reality is that FATF should have taken similar actions when the US and other Western nations engaged in invasions, notably in Iraq and Libya, over the past two decades. These military interventions caused extensive instability and human suffering, often justified under the pretext of uncovering elusive weapons of mass destruction or removing dictators.

Shifting focus to the Israeli scenario, FATF has not issued any public statement expressing solidarity with the people of Palestine, who endure a situation comparable to that in Ukraine, albeit with even more severe casualties. Multiple reports from international bodies, including the UN Human Rights Council, have highlighted grave concerns regarding Israel’s aggression in the Gaza Strip and the West Bank.

Evidence ranges from the excessive use of force to the destruction of homes and essential infrastructure, necessitating a strong response from strategic global organisations.

Drawing parallels with the suspension of Russia, the principles that led to Russia’s suspension – violations of FATF’s core principles and undermining global security – should apply in the case of Israel. A consistent approach is crucial for maintaining the credibility and integrity of FATF.

The success of South Africa in the International Court of Justice (ICJ), where the judges called on Israel and signatories of the UN Genocide Convention to prevent any acts of genocide, adds weight to the call for FATF to act on Israel.

Suspending Israel’s FATF membership would emphasise the importance of accountability and justice, sending a clear message that nations must answer for alleged violations of international humanitarian law.

Given FATF’s prior action against Russia and the escalating calls for its blacklisting, ensuring consistency in responding to nations confronting severe allegations is imperative for upholding credibility. A resolute position by FATF could function as a potent tool, exerting pressure on Israel to address international concerns and participate in a transparent dialogue to resolve the conflict. It can serve as a deterrent against actions that jeopardise global security.

Indeed, FATF not only needs to suspend Israel’s membership, granted only in 2018, but should also take the additional step of blacklisting it. Blacklisting could effectively prevent any countries from providing financial support to Israel and curtail its harmful activities, including those with genocide implications. The discussion on this matter should broaden to include the role of the US and other nations that are providing financial support to Israel.

Is providing funds to Israel amid the current situation not akin to financing terrorism? Or do some Western countries consider themselves exempt from international law and standards?

The upcoming FATF plenary meeting presents a crucial moment for the organisation to demonstrate its commitment once again to justice, accountability, and the protection of human rights. Encouraged by South Africa’s success at the ICJ, the progressive global community should turn its attention to FATF, and other strategic international organisations, urging it to lead by blacklisting and suspending Israel’s membership.

As FATF engages in discussions about its strategic priorities, the imperative to address geopolitical concerns and respond resolutely to alleged violations becomes paramount in fostering a world where justice and human rights prevail.

In tandem with South Africa’s legal pursuit against Israel at the ICJ, the Ministry of Finance of South Africa, in collaboration with other stakeholders within FATF, must take the lead in advocating for decisive action against Israel. This call echoes the fundamental principles of accountability and justice that should form the bedrock of the international financial system.

*Hlophe writes in his personal capacity and is Adviser to the Standing Committee on Finance, Parliament of South Africa. He holds a PhD in Law.

**The views expressed do not necessarily reflect the views of Independent Media or IOL