Pakistan Out Of FATF’s Grey List, FATF Announced Its Decision

FATF Announces Its Decision After Its 3 Days Plenary in Berlin Germany Regarding Pakistan Being In Grey List

Pakistan has basically finished its two action plans, according to the Financial Action Task Force (FATF), although on-site visits are necessary to verify the country's execution. It has not, however, been removed from the FATF's grey list.

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"FATF has made the preliminary determination that Pakistan has substantially completed its two action plans, which cover 34 items, and that an on-site visit is warranted to verify that Pakistan's AML/CFT reforms have begun and are being sustained, and that the proper political dedication remains in place to sustain implementation and improvement in the future," the global money laundering watchdog said in a statement.

The FATF stated that the on-site inspection will take place as soon as practicable, and that if the visit is successful, Pakistan will be removed from the list. Pakistan's continuing governmental commitment to countering terrorist funding and money laundering has resulted in tremendous success, according to the report.

Between the 14 and 17 June 2022, the global watchdog's Plenary sessions were conducted in Berlin, where its members examined a variety of problems related to Pakistan's growth.

FATF has recognised Pakistan's completion of both Action Plans (2018 and 2021), according to a statement from the Ministry of Foreign Affairs, and has permitted an onsite visit to Pakistan as a last step to exiting the FATF's grey list.

Hina Rabbani Khar, Minister of State for Foreign Affairs and Chairperson of the National FATF Coordination Committee, led the Pakistan delegation to the FATF Plenary sessions in Berlin.

Congrats Pak! FATF declares both Action Plans complete. Intl community has unanimously ack our efforts. Our success is the result of 4 yrs of challenging journey. Pak reaffirms resolve to continue the momentum and give our economy a boost. Well done Pak Team FATF. Pak Zindabad!

— Hina R Khar (@HinaRKhar) June 17, 2022

"During the discussion on Pakistan's progress, FATF members complimented Pakistan for completing both Action Plans, which covered 34 items, and notably on finishing the 2021 Action Plan in record time." Despite several hurdles, including the COVID 19 epidemic, Pakistan continued to make unwavering efforts to complete these Action Plans," it stated.

According to the statement, Pakistan has made significant progress in the AML/CFT area since implementing FATF Action Plans. The collaboration with the FATF has resulted in the construction of a solid anti-money laundering and counter-terrorist financing framework in Pakistan, as well as the improvement of our systems to meet future challenges.

The army chief claimed it was a major endeavour setting the path for the country's "whitelisting" in a statement released by the ISPR.

 

Completion of FATF AML /CFT action plans by Pak is a great achievement. A monumental effort paving way 4 whitelisting. “Core cell @ GHQ which steered the national effort & civil - military team which synergised implementation of action plan made it possible, making Pak proud”COAS

— DG ISPR (@OfficialDGISPR) June 17, 2022

Defense Minister Khawaja Asif also appreciated by saying "Absolutely Brilliant".

Absolutely brilliant, Mubarak...
Pakistan Zindabad https://t.co/vdTctRaguN

— Khawaja M. Asif (@KhawajaMAsif) June 17, 2022

On June 28, 2018, Pakistan was placed on the Financial Action Task Force's (FATF) 'grey list' for the third time, and it has been taking steps to avoid exclusion ever since.

Pakistan was originally included to the FATF grey list in 2008 for failing to fulfil international anti-money laundering (AML) and counter-terrorist financing (CFT) criteria. Pakistan was removed off the list in 2010 after upgrading its anti-money laundering and counter-terrorist financing regime. Pakistan was added to the grey list again in 2012, and stayed there till 2015.

Why was Pakistan on the FATF Grey list?

Pakistan was added to the list in 2008 and then removed in 2010. From 2012 through 2015, the country was once again on the list.

 

Since 2018, it has been on the 'grey list,' also known as the "enhanced monitoring list."

 

The UN-designated terror organisations, including Jaish-e-Mohammed chairman Masood Azhar, Lashkar-e-Taiba founder Hafiz Saeed, and its 'operational commander' Zakiur Rehman Lakhvi, must be prosecuted by Pakistan, the world body stated in 2021.

 

"Getting off the FATF grey list is a highly technical process, but at some point, the international community must recognise Pakistan for the genuine steps it has taken against certain militant groups and their leaders," says Adam Weinstein, a research fellow at the Quincy Institute for Responsible Globalization who focuses on Pakistan and Afghanistan, told TRT World.

In April, Pakistan sentenced Saeed to 31 years in prison for terrorist funding in two separate trials.

 

"Initially, Pakistan's government was more concerned with minor concerns than with the major issues of terrorist financing and enforcement," Weinstein added.

 

"Let's face it, many other nations provide a higher money laundering danger than Pakistan, but they aren't grey flagged." Because of terrorism, Pakistan has been singled out."

 

What are the implications of being on the FATF's ‘grey’ list?

Pakistan's economy is reliant on foreign investment. If the country stays on the FATF's grey list, it will continue to have an impact on its imports, exports, and remittances, as well as its ability to receive foreign financing.

 

According to Weinstein, removing Pakistan from the list will eliminate one more self-inflicted obstacle to international direct investment, but many more will remain.

 

"It's difficult to quantify the impact of a grey listing because it incurs repeat expenses, discourages foreign investment, and may even affect consumer purchasing," he explained.

 

However, a de-listing will not be a game-changer because the economy has so many other problems, according to Weinstein.

The multinational group was created with the goal of developing ways to combat money laundering, but following the 9/11 attacks, its mandate was broadened to include preventing terrorist financing.

The FATF Standards currently provide a globally coordinated response to organised crime, corruption, and terrorism. It also assists authorities in preventing the funding of weapons of mass devastation.

 

The summit was attended by delegations from 206 FATF members and observers, including the International Monetary Fund (IMF), the United Nations, and the World Bank.

 

"Removing Pakistan from the grey list would be a huge boost for Pakistan in the midst of a major economic crisis," said Michael Kugelman, deputy director and senior associate for South Asia at Wilson Center.

"...as investors and banks would no longer have to be concerned about the reputational consequences of doing business with Pakistan while it is on a terrorist funding watch list."