Morocco breathed a sigh of relief this month after a global financial crime watchdog removed it from an international grey list of nations under close watch for signs of wrongdoing.
The move from the Paris-based Financial Action Task Force ends a period of increased monitoring for terrorism financing, money laundering, cross-border crime and tax evasion in the north African state.
After three years of scrutiny, field monitoring and negotiations, the FATF backed improvements to financial transparency. It now puts Morocco alongside industrialised nations and major world powers in the category of countries with the most credible and transparent measures in place against a rundown of financial misdeeds.
Others on that list include some emerging economies with an open banking system, and Gulf countries, while two G20 nations, Turkey and South Africa, remain on the grey list. So do the Cayman Islands, Barbados and Panama, which are considered as tax havens.
Russia's membership to FATF was suspended due to its invasion of Ukraine. At the same time, Iran, North Korea, and Myanmar remain on a blacklist of countries subject to economic and trade sanctions.
Over 180 member states are required to cut off all banking ties with blacklisted rogue states that support terrorism by financing armed criminal groups. The FATF is scheduled to meet in February 2024 to decide the fate of the countries on these lists.
Established in 1989 under US President Ronald Reagan, the FATF was tasked to fight money laundering from the drug trade — especially in Latin America. Since then, its remit has expanded. It took on the fight against the financing of weapons of mass destruction in the early 1990s during the siege of Iraq under its late president, Saddam Hussein.
After the September 11 attacks, the watchdog expanded to include fighting terrorism. It also fights cross-border crime, human trafficking, illegal immigration, tax fraud, financial corruption, and other acts that threaten the global banking system or promote international crime, illegal enrichment, and bribery.
A range of international bodies, monitor, implement, and follow the FATF’s decisions. They include the United Nations and its Security Council, the World Bank, the International Monetary Fund, regional banks, and Interpol.
These entities are entitled to raise any issue related to international crime, including cyber fraud, especially related to private bank accounts, or suggest the blacklisting or suspension of any country’s membership, to be endorsed by FATF’s member countries.
Iran will likely either remain on the blacklist or be suspended altogether if it fails to reach a new agreement with the International Atomic Energy Agency regarding its nuclear programme. It would then be seen as violating international law.
Morocco accuses Tehran of supplying separatist militants in the Algerian desert with combat drones to destabilise regional security in North Africa and Mediterranean Sea region — a serious enough accusation for it to be categorised as a sponsor of terrorism.
Rabat sees its removal from the grey list as a diplomatic, political and legal victory, and an international recognition of the improved credibility of its institutions. The move has undoubtedly boosted confidence in its local economy, acknowledging the legislative, administrative, and management efforts of recent years.
The measures included more transparency in the financial and investment sectors to protect the rights and personal data of depositors, dealers, and investors.
According to the US rating agency Moody’s, the decision “will raise confidence in the entire local banking sector, thus strengthening Morocco's position in international economic and financial forums and is an additional source of strength for the banking sector in general."