Pakistan big hopes to get off FATF’s ‘grey list’ tomorrow
The removal of Pakistan from the list of nations subject to “enhanced monitoring” will likely be discussed during the two-day meeting of the Financial Action Task Force (FATF), a global organisation that monitors money laundering and the financing of terrorism. The conference begins on Thursday in Paris.
In a meeting in June, the FATF stated that Pakistan would remain on the list, also known as the “grey list,” but that it might be taken off following an on-site inspection to assess progress.
The Foreign Office stated last month that a FATF technical team had a “successful” visit and that Islamabad anticipated a “logical completion” of the examination process in October.
Here are a few crucial points:
The implications for Pakistan
Pakistan was added to the list in 2018 as a result of “deficiencies relating to strategic counter-terrorist financing.” The FATF handed the nation a comprehensive reform agenda.
If Pakistan were to be taken off the list, it would effectively benefit in terms of reputation and obtain a clear report card from the world community on financing of terrorism.
According to economist and former Citigroup banker Yousuf Nazar, it would lessen monitoring of Pakistan-related international transactions while having little effect on the country’s overall suffering economy.
Due to compliance breaches and anti-money laundering offences, two major Pakistani banks, HBL and National Bank of Pakistan, each paid fines of $225 million in 2017 and $55 million in 2022 to US regulators.
After Moody’s reduced Pakistan’s sovereign credit rating, removal from the FATF list would provide Pakistan a lift. Additionally, it would boost morale, which is crucial for attracting foreign direct investment.
Pakistan is at risk
Being on the “grey list,” according to the FATF, does not require financial institutions to take additional precautions, but the organisation emphasises the necessity to weigh the risks involved when doing business with these nations.
If a nation is demoted from the “grey list” to the “black list” or is designated as a “high-risk” organisation, the grey list of FATF can demand that international financial institutions stop doing business in and associating with offending nations, and it can pressure governments to impose financial sanctions.
Iran and North Korea are the two nations that are now “black-listed.”
Several years ago, Pakistan was widely reported as being on the verge of being “black-listed.”
What did the programme consist of?
An exclusion from the list would be the result of a four-year reform process that called for significant adjustments to Pakistan’s financial sector, especially to the laws governing money laundering and terrorism financing.
FATF provided Pakistan with an action plan in 2018 to address strategic gaps linked to counter-terrorist funding by passing laws and reorganising coordination between law enforcement and financial institutions.
According to the FATF’s most recent report, Pakistan has finished all of the actions on its action plan except for one: to show that senior leaders of militant organisations with UN designation have been the subject of investigations and prosecutions.
Repression of militant groups
According to Michael Kugelman, director of the South Asia Institute at the Washington-based Wilson Center think tank, “Pakistan’s recent announcement of fresh sentences for Lashkar-e-Hafiz Taiba’s Saeed and Sajid Mir is what ultimately got things done.”
According to Citibank’s Nazar, Pakistan may be removed from the list as a result of recent efforts taken to imprison, fine, and seize the assets of people connected to terrorist anti-India groups.