PAKISTAN RETAINED ON GREY LIST OF FATF
Context: Pakistan has been retained on the “grey list” of the Financial Action Task Force (FATF) for another four months, with a stern warning from the global watchdog that met in Paris (February 19-21) to complete the 27-point action plan it has been given by June 2020 or face being put on the “black list”.
- The FATF again expressed concern given Pakistan’s failure to complete its action plan in line with the agreed timelines and in light of the Terror Financing risks emanating from the jurisdiction.
- According to the FATF summary reportreleased Pakistan needs to continue to work on eight specific areas, including demonstrating it is “identifying and investigating” all terror financing activity in the country, freezing the funds of all designated terrorists and that its prosecutions result in “effective, proportionate and dissuasive sanctions” against all terror entities in Pakistan.
BLACK LIST
The “black list” refers to countries for who there has been a “call to action” or strict banking and international finance sanctions, a list which at present includes Iran and North Korea.
GREY LIST
- Pakistan is one of the 12 countries on the “grey list” or “other monitored jurisdictions” that are being reviewed for actions to stop terror financing and money laundering.
- Pakistan has been lobbying to get off the grey list, citing actions already taken, and reportedly has the backing of Turkey to be removed from the list entirely.
- Significantly, even Indian government officials said placing Pakistan on the black list might prove counter-productive, as it would not be incentivized to complete the action plan under a deadline.
- Pakistan has been on the grey list in the past as well, including between 2012-2015, after which it was taken off the watch list until 2018.
FATF
- The Financial Action Task Force is an intergovernmental organizationfounded in 1989 on the initiative of the G7 to develop policies to combat money laundering.
- In 2001, its mandate was expanded to include terrorism financing.
- The objectives of 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.
- FATF is a “policy-making body” that works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
- Since 2000, FATF has maintained the FATF blacklist(formally called the “Call for action”) and the FATF greylist (formally called the “Other monitored jurisdictions”)
