Pakistan likely to remain on FATF greylist, say sources
Context: Pakistan is unlikely to exit the Financial Action Task Force (FATF’s) greylist as latest evaluation shows a clear 21 of 27 action points, with six key areas outstanding where Pakistan has yet to show progress.
- There is still no consensus amongst the 39-member FATF, which includes the U.S., U.K., France, Germany, China and Russia, to blacklist Pakistan, despite its failure to meet its original deadline in September 2019.
- This means the group would maintain status quo and continue Pakistan on the greylist until February 2021.
- Pakistan needs at least 3 of 39 members to keep it off the blacklist, and the support of 12 of 39 members to exit the “greylist”.
- In the past two months, the Imran Khan government has brought eight new laws to parliament in an effort to enhance its rating with the FATF.
- The six points of failure in the FATF’s 27-point action list include
- Pakistan’s lack of action against charitable organisations or NPOs (Non-profit organisations) connected to terror groups banned by the UN Security Council, and
- delays in prosecution of banned individuals and entities like Lashkar e Toiba chief Hafiz Saeed and LeT operations chief Zaki Ur Rahman Lakhvi
- Pakistan has been found non-compliant in cracking down on terror financing through narcotics and smuggling of mining products including precious stones.
FATF
- The Financial Action Task Force (on Money Laundering) (FATF), is an intergovernmental organisation founded 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.
- FATF monitors progress in implementing its Recommendations through "peer reviews" ("mutual evaluations") of member countries.
Since 2000, FATF has maintained the FATF blacklist (formally called the "Call for action") and the FATF greylist (formally called the "Other monitored jurisdictions").
Greylist vs. Blacklist
- The greylist refers to countries that are “monitored jurisdictions”, while the blacklist refers to countries facing a “call to action” or severe banking strictures, sanctions and difficulties in accessing loans.
- In February this year, the FATF had threatened Pakistan with a potential blacklist in a sternly worded note that said, “All deadlines in the action plan have expired.”
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