- Unanimously agreeing to put into effect its February decision to place Pakistan in the grey list for inaction against terror funding, the Financial Action Task Force (FATF) has laid out a 10-point action plan for compliance with its guidelines.
- The FATF has put Pakistan on the ‘grey list’ because of its alleged failure to crack down on terror funding.
About Financial Action Task Force (FATF)
- The Financial Action Task Force (FATF) is an inter-governmental body established 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 is therefore a policy-making body which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
- The FATF Secretariat is housed at the OECD headquarters in Paris.
- Pakistan remained on the FATF grey list from 2012 to 2015.
- The process began in February 2018 when FATF approved the nomination of Pakistan for monitoring under its International Cooperation Review Group (ICRG) commonly known as ‘grey List’.
- Pakistan was asked to prepare a plan to address international body’s concerns and get its approval or it could risk being moved to the black list.
- It presented a 26-point plan of action to the FATF planery with the commitment to implement it over a period of 15 months to address the concerns of the global community.
- The endorsement of the plan means that FATF formally placed Pakistan on the list. In case it had rejected the plan, Pakistan would have been on FATF’s Public Statement, also called as the black list.
- Pakistan has been placed among the jurisdictions (states) with strategic deficiencies Ethiopia, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen.
Remedial measures recommended by FATF to Pakistan-
- Ensure that terror funding risks are properly identified, assessed and that supervision is applied on a risk-sensitive basis.
- Prevent financial institutions from indulging in money laundering and terror funding.
- Take stringent action against illegal financial operations, identify cash couriers and enforce controls on illicit movement of currency.
- Improve coordination between the provincial and federal authorities on combating terror funding and enforce effective prosecution and conviction of the designated persons, entities and their affiliates.
- Effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all designated terrorists and those acting for or on their behalf.
- Take measures demonstrating that UN-designated terrorists and banned terror outfits such as Hafiz Saeed and Masood Azhar, Taliban and Haqqani Network, Jaish-e-Mohammad, Lashkar-e-Taiba, and their affiliates, are deprived of their resources and their sources of funding are choked.
Impact on Pakistan
- Security experts say that Pakistan has been on and off the grey list since at least 2008, and most recently came off the grey list in February 2015. But this time, the grey list will hurt its floundering economy even harder because simultaneously the US, too, has turned the heat on Pakistan.
- Now every transaction a Pakistani bank has with foreign banks will be scrutinised, which will affect the country’s exports and import.
- It is going to affect lakhs of families in the country who survive on remittances sent from abroad by family members.
- Its international credit-rating will suffer and international conglomerates will be hesitant to do business with the country.
- Now, the global community will be wary of conducting financial deals with Pakistan.