The Financial Action Task Force (FATF) has decided to keep Pakistan on the gray list till June this year, giving it four months to implement the remaining three points.
The FATF President, Dr Marcus Pleyer noted that Pakistan was working towards its pledge made at a high level to implement the illegal financing watchdog’s suggestions, saying that is not the time to put Pakistan on the blacklist.
Financial Action Task Force
The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog and was established in July 1989 by a Group of Seven (G-7) countries in a Summit held in Paris.
The inter-governmental body sets international standards that aim to put off illegal activities and the harm they cause to society. As a policy-making body, the FATF works to generate the essential political will to bring about national legislative and regulatory reforms in these areas.
With more than 200 countries and jurisdictions committed to implementing them. The FATF has developed FATF Standards, which ensure a coordinated worldwide response to stop organized crime, corruption and terrorism. The FATF also works to stop funding for weapons of mass destruction. Pakistan is part of the FATF’s Asia Pacific Group.
Grey and blacklists of FATF
The Financial Action Task Force (FATF) is an independent inter-governmental body. Those countries which don’t support terror funding and money laundering are placed on the grey list by the FATF.
Black List: Only those countries are included in this list that FATF considers as uncooperative tax havens for terror funding.
These countries are known as Non-Cooperative Countries or Territories (NCCTs). In other words; countries that are supporting terror funding and money laundering activities are placed on the Blacklist.
Meaning of Grey List: Those countries which are not considered as the safe heavens for supporting terror funding and money laundering; included in this list. The inclusion in this list is not as severe as blacklisted.
Now Greylist is a warning given to the country that it might come in Blacklist if a country is unable to curb the mushrooming of terror funding and money laundering; it is shifted from the grey list to blacklist by the FATF.
Pakistan joins the gray list
Pakistan was included in the grey list for the first time in 2012 and remained in it till 2015. Since 29 June 2018, Pakistan has been on the FATF’s grey list for deficiencies in its anti-money laundering regimes and counter-terror financing.
Until the last review, Pakistan was found poor in acting against the organizations allegedly associated with the terror groups listed by the UN Security Council, tackling the smuggling of narcotics and precious stones and prosecuting and convicting proscribed individuals.
Recently, the country had taken further measures including the prosecution of Lashkar-e-Taiba chief Hafiz Saeed and his accomplices in terror financing cases.
Pakistan address 24 points
The FATF takes note of the momentous improvement made on the whole action plan. So far, Pakistan has made progress across all action plan points and has now largely addressed 24 of the 27 action items, according to FATF. However, the FATF sturdily emphasizes Pakistan promptly complete its full action plan before June 2021 as all action plan deadlines have expired.
A reminder on the FATF website said Pakistan should continue to work on implementing the three remaining points in its action plan to deal with its strategically main insufficiencies, namely by:
First: Demonstrating that TF (terrorism financing) examinations and trials target persons and entities acting on behalf or at the direction of the designated persons or entities; Second: demonstrating that TF suits result in useful, impartial and dissuasive sanctions; and
Third: demonstrating effective implementation of targeted financial sanctions against all 1267 and 1373 selected militants, particularly those acting for or on their behalf.
Government position
Federal minister Hammad Azhar reacting to the FATF decision said Pakistan had completed approximately 90 percent of its current FATF action plan with 24 out of 27 points rated as largely addressed and the remaining three points moderately addressed.
If Pakistan does not meet the criteria laid out by the FATF, it could fall to the blacklist, potentially being unable to obtain financial support from the International Monetary Fund (IMF), World Bank, the Asian Development Bank (ADB), and other international institutions.
Usually, Pakistan’s grey list status could impact imports, exports, remittances, and its ability to borrow money from international lenders. No doubt, Pakistan had made substantive progress on the 27 items of the FATF action plan and was duly admitted by the wider FATF membership.
Pakistan still has a long way to go to rid ourselves of the menace of terrorism, corruption and we should not lose sight of the real objective. Confidently, FATF will acknowledge our efforts in this respect.
The government of Pakistan is welcome to get more time and now there is a need for the government to ensure immediate implementation of other conditions of the FATF so that Pakistan can be saved from economic sanctions and other global issues.
