The Financial Action Task Force (FATF) on Friday announced that Pakistan has successfully complied with 21 out of 27 points of action and decided to keep the country on its grey list until February 2021.
FATF President Marcus Pleyer announced the decision at a virtual press conference held after the body’s three-day plenary session came to an end on 23 October 2020.
The global watchdog reviewed Pakistan’s progress on the 27-point action plan for addressing anti-money laundering and terror financing in its plenary session that started on October 21.
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. On 29 June 2018 FATF Grey listed Pakistan for the second time.
The process began in February 2018 when FATF approved the nomination of Pakistan for monitoring under its International Cooperation Review Group (ICRG) commonly known as the ‘Grey list’.
Currently, Pakistan is on the Grey list of FATF. Due to increasing pressure; Pakistan is striving to comply with all the 27 FATF Targets. But as in October 2019; it could manage to comply with 21 Â targets out of 27.
On 23 October 2020, the financial watchdog said: “To date, Pakistan has made progress across all action plan items and has now largely addressed 21 of the 27 action items. As all action plan deadlines have expired, the FATF strongly urges Pakistan to swiftly complete its full action plan by February 2021.”
Global sanctions- blacklistÂ
After being placed on the grey list, a country is directly scrutinized by the financial watchdog until it is satisfied by the steps taken to curtail terror financing and money laundering.
If FATF does not deem progress by countries on the list as satisfactory, they may be relegated to the blacklist — a list of the countries branded as uncooperative and tax havens for terror funding. These countries may face global sanctions as well.
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 World Bank, the International Monetary Fund (IMF), 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.
More substantial progress need
It may be essential for Pakistan to abide by FATF demands, however; it is also in our own interest to do so.
Pakistan has been lax on these issues for too long — often as a result of mislaid priorities — and it has had to endure a heavy cost for this.
Now that the state has taken a decision to crack down on terror financing and extremism, Pakistan would be doing itself a favor by going all the way to reform its archaic system and block all dodges that permit for the unaccounted trafficking of money.
On the other hand, it is important that parliament be taken on board before the next FATF meeting. The opposition also needs to act positively for the national interest. The challenges and crises we are confronted with can only be defeat if there is a consensus on the minimum agenda. Â Â
All steps taken so far should be discussed in the Senate and National Assembly so that the people’s representatives can give their input.
Pakistan has chosen the right direction and it should hold steady even beyond the requirements of FATF.
 We still have a long way to go to rid ourselves of the menace of terrorism, corruption and we should not lose sight of the real objective. Hopefully, FATF will recognize our efforts in this respect.
