Pakistan on FATF Grey List

Pakistan on FATF (Financial Action Task Force) Grey List

According to Official Sources, FATF – Financial Action Task Force (a terrorism financing watchdog) put Pakistan on Grey list. FATF took the decision during a plenary meeting in Paris, arguing that Pakistan had failed to act against terror financing on its soil despite Pakistan submitted a comprehensive 26-point action plan to the FATF to choke the funding of militants groups, including Mumbai attacks mastermind Hafiz Saeed-led JuD and its affiliates, to avoid being blacklisted by it..

What does it mean for Pakistan ?

  • Being placed on the ‘grey list’ means that Pakistan’s financial system will be designated as posing a risk to the international financial system because of “strategic deficiencies” in its ability to prevent terror financing and money laundering.
  • Pakistan will be directly scrutinised by the financial watchdog until it is satisfied by the measures taken to curb terror financing and money laundering.
  • The ‘Grey List’ status does little more than raising the compliance burden on counterparts, such as correspondent banks, dealing with entities within Pakistan’s financial system, and therefore attaches an additional cost to many external sector transactions.

Further If Pakistan fails to satisfy the FATF mutual evaluation then it will be placed on the Blacklist which currently features Iran & North Korea, a far more serious outcome that will reach beyond mere embarrassment

Pakistan Earlier Status on FATF List :-

  • Pakistan spent three years on the ‘grey list’ between 2012 and 2015, without the designation affecting its ability to float international bonds, borrow from multilateral bodies, receive or send remittances or conduct international trade.

About FATF (Financial Action Task Force) :-

  • The Financial Action Task Force (FATF), is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. In 2001 its mandate expanded to include terrorism financing.
  • 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.
  • The FATF Secretariat is housed at the OECD headquarters in Paris.

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