FATF placing Pakistan on ‘grey list’

In a major political and economic blow, Pakistan was placed on the grey list of the Financial Action Task Force (FATF) late on Wednesday after a plenary meeting in Paris, according to diplomatic sources. The FATF however, is yet to make a formal announcement.

Sources said despite Pakistan’s desperate attempts to avert or at least delay the listing, the financial watchdog believed that Pakistan had failed to curb terror financing on its soil.

The placement on the ‘grey list’ could hurt Pakistan’s economy as well as its international standing.

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 ‘grey List’.

Pakistan was asked to prepare a plan to address international body’s concerns and get its approval or it could risk being moved to the blacklist.

It presented a 26-point plan of action to the FATF plenary with the commitment to implement it over a period of 15 months to address the concerns of the global community.

The endorsement of the plan means that FATF formally placed Pakistan on the list. In case it had rejected the plan, Pakistan would have been on FATF’s Public Statement, also called the blacklist.

On June 20, the Securities and Exchange Commission of Pakistan issued Anti Money Laundering and Countering Financing of Terrorism Regulations 2018, in compliance with FATF recommendations.

On June 8, the National Security Committee (NSC) reaffirmed its commitment to cooperate with the FATF.

By January next year, Pakistan will publish updated lists of persons and entities prescribed under the Anti-Terrorism Act and the UN-designated entities.

The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 on the initiative of the G7.  It is a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in various areas. The FATF Secretariat is housed at the OECD headquarters in Paris.

The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally.  In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.

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