FATF removes Pakistan from its grey list

The Financial Action Task Force (FATF) has announced the removal of Pakistan from its grey list, appreciating the country’s efforts in anti-money-laundering and anti-terror financing, ARY News reported.

The Financial Action Task Force has decided by consensus that Pakistan has completed all substantial, technical and procedural requirements of both the 2018 and 2021 Action Plans. As a result, Pakistan has been taken off the list of jurisdictions under increased monitoring, with immediate effect.

This decision was taken during the FATF Plenary meeting held in Paris, France from 20-21 October 2022. Minister of State for Foreign Affairs/Chairperson National FATF Coordination Committee, Ms Hina Rabbani Khar, led the Pakistan delegation to the FATF Plenary.

Pakistan has made enormous progress in the Anti Money Laundering and Countering Financing of Terrorism (AML/CFT) domain over the course of fulfilling the requirements of both Action Plans. Despite many challenges, including the Covid-19 pandemic, Pakistan continued the reform trajectory and sustained the high-level political commitment to aligning its domestic AML/CFT regime with international best practices.

Achieving FATF targets was a whole-of-nation endeavour. Multiple ministries, departments and agencies, both at the Federal and Provincial levels, contributed to achieving this national objective. The engagement with FATF has led to strategic improvements in Pakistan’s laws and procedures, making its domestic AML/CFT regime more resilient to cope with current and future challenges.

WHAT IS THE FATF?

To simplify things, FATF has three basic purposes:

To curb money laundering
To stop terror financing
To counter financing of weapons of mass destruction

WHAT IS FATF’s GREY LIST?

The greylisting of any country by FATF means that it has been placed under increased monitoring to oversee its progress on measures against terror financing and money laundering.

The countries then have to increase efforts and take measures against the above-mentioned topic to be removed from the unwanted watchlist.

Pakistan has had a complicated relationship with the FATF, and it is not the first time the country has found itself on the grey list.

Pakistan had been on the undesired list three times. We were first put on the list in 2008 but were removed in 2012. FATF put Pakistan on the grey list once again in 2012 but was removed in 2015. However, the third stint starting in 2018 has been the longest time period Pakistan has spent on the FATF grey list.

Below are some of the effects being grey listed causes:

Donor organizations like World Bank and IMF are hesitant to provide any financial assistance
The economy starts shrinking as investors are reluctant to invest in a country with a fragile economy
Lack of investment causes bearish trends in the stock market
The local currency starts losing its value, causing a rise in inflation, the trade deficit
Trade suffers as other countries avoid engaging with grey-listed countries