Will Pakistan Stay on the FATF Grey List:
Financial Action Task Force:
FATF is an intergovernmental organization that was established at the G7 Summit that was held in Paris in 1989. Recognizing the threat posed to the banking system and financial institutions. FATF is also known by its French name Groupe d’action financiere (GAFI). It is not decided yet that Pakistan will stay in the FATF Grey list or it will be removed?
Structure of FATF:
FATF consists of 39 members, 37 are the jurisdiction, and 2 regional organizations (the Gulf Cooperation Council and the European Commission). There is 31 international and regional organization that are the associate members of the task force and participates in its work. The members of FATF meet three times a year in February, June, and October. Dr. Marcus Pleyer is the president of FATF from Germany.
The president has been elected for two years and the tenure starts on 1st July and ends on 30th June two years after assuming office. FATF is a technical body that ensures the global financial system. It is an ever-evolving body because its main function is to protect the integrity of the global financial system.
The function of FATF:
Initially, FATF was limited to money laundering only but in 2001 FATF expanded its mandate to terror financing and in 2012 it added efforts to counter the financing of proliferation of WMDs (weapons for mass destruction). Now money laundering, terror financing, and financing of WMDs are the three main mandates of FATF.
FATF has a legal framework called 40+9 recommendations. These recommendations provide the complete set to countermeasure against these three mandates. FATF does not have any law enforcement agency they follow the old technique of name and shame.
Will Pakistan stay on the FATF Grey List?
History of Pakistan with FATF:
In 2008 FATF issued a major early report with concerns about AML/CFT implementation in Pakistan. In 2010 Pakistan enacts the money laundering act. 2012 FATF put Pakistan on the grey list after three years in 2015 Pakistan exits the grey list. In 2018 Pakistan was again put on the list in June.
IMF urges Pakistan to comply with the FATF recommendations in 2019 in the same year in the plenary meeting of FATF Shah Mahmood Qureshi promises actions to get the country out of the list. Pakistan works successfully to achieve points raised by FATF. In 2020 in the semi-plenary meeting in Beijing Pakistan’s case was heard. And the deadline for the next review was given was February 16 -21,2020.
In February meeting was held and the deadline was extended for further four months. In June 2020 Pakistan meets 26 out of 27 points of FATF and is still on the grey list.
In June 2021 another action plan was given largely focused on money laundering. Earlier this week the plenary meeting was held in Pakistan covering 30 out of 34 points of FATF and still on the grey list.
Recent Results of the meeting:
The international watchdog against money laundering and financing of terrorism the Financial Action Task Force had put Pakistan on the grey list since 2018. This is not the first time Pakistan being on the grey list, the country was there in 2008 and from 2012 to 2015.
Pakistan was put on the grey list in 2018 and is still battling to overcome the challenges. On Thursday the president of FATF announced that Pakistan will continue to remain on its grey list after the three-day virtual meeting.
In 2018 Pakistan was given an action plan with 27 points that focused on terror financing and Pakistan was very much able to address 26 points out of 27. Earlier this year Pakistan was given another action plan largely focused on money laundering consisting of 7 points. Pakistan had successfully achieved four points from this plan.
So the country had to complete two concurrent action plans with a total of 34 points, it has now addressed or largely addressed 30 points according to the result of the three-day-long virtual meeting of FATF members.
In the meeting, questions were arising about whether to put Pakistan on the blacklist because of its long stay on the grey list. But Dr. Pleyer said that the country had completed 30 points out of 34 points of the given action plan. He further added that the government is cooperating with the financial watchdog which will help the authorities to stop corruption and prevent terrorism.
Is this a financial or a political issue?
The current scenario of the international news indicates Pakistan’s placement again on the grey list is more of a political than a financial concern. US is the major financier of FATF, India being the US ally and is the only South Asian country to be a part of FATF. These countries want to put pressure on Pakistan because of the ups and downs in the relations.
Read More about FATF: https://www.fatf-gafi.org/
Questions were rising that the Modi government had ensured Pakistan remained on the grey list. Replying to this statement Dr. Pleyer said FATF is a technical body that takes its decisions by consensus, the decisions are not taken by one or two countries only. Despite making good progress Pakistan is still on the grey list so a question was pointed out regarding the FATF’s capabilities of making a just decision.
The overall performance of Pakistan in fulfilling the two action plans is quite satisfactory covering 30 points out of 34 points.
Pakistan’s performance regarding money laundering and financing of terrorism will be brought under consideration after four months in February 2022. Till then Pakistan is under strict observance. The Pleyar had made it clear that the country will not be delisted until both the activities were completed.
FATF grey list appears to be bad news for the country like Pakistan because it causes difficulties to get financial aid from IMF, World Bank, Asian Development Bank, and the European Union which will hurt Pakistan’s already unstable economy.
This article is written by Aimen Jamil, a student at the National University of Modern Languages and Deputy Director at the Youth Diplomacy Forum. She is interested in foreign affairs Diplomacy, and the South Asian Region.