The Financial Action Task Force (FATF) is an inter-governmental entity that sets standards and develops policies to combat money laundering, terrorist financing, and similar threats to the integrity of the global financial system. This body plays a critical role in safeguarding the international economy by ensuring that countries abide by robust regulatory and operational measures.
Pakistan’s Engagement with FATF
Pakistan has been on the FATF’s watchlist since June 2018 when it was greylisted because of the risk of money laundering and terror financing discovered within its financial systems. Being greylisted implies that the country hasn’t adequately curtailed these activities. The FATF Plenary meeting, scheduled to take place in Orlando, Florida from June 16th to 21st, might deliberate on a proposal to downgrade Pakistan from the greylist to the blacklist.
Blacklisting: Severe Consequences Await
Blacklisting a country amounts to cutting off access to international finance, a significant blow to any economy. If blacklisted, Pakistan’s already fragile economy might suffer a massive hit. Currently, Pakistan’s status hangs precariously as it hasn’t satisfactorily complied with 18 out of the 27 indicators agreed on a 10-point action plan based on a high-level political commitment made by Pakistan to strengthen its anti-money laundering and combating the financing of terrorism (AML/CFT) regime with the FATF and the Asia Pacific Group (APG).
Before the last subheading, let’s look at a summary of some facts:
| FATF Indicators | Compliance Status |
|---|---|
| Total Indicators | 27 |
| Compliant Indicators | 9 |
| Non-compliant Indicators | 18 |
The Politics of Blacklisting: India’s Role and Others
If Pakistan is to avoid blacklisting, it would need the support of at least three votes out of 36. India, which is a voting member of both the FATF and APG and holds a co-chair position in the Joint Group, currently pushes for Pakistan’s blacklisting. Notably, India wasn’t part of the group that moved for Pakistan’s greylisting in 2018 – spearheaded by the US, UK, France, and Germany, with China not opposing.
The Asia Pacific Group (APG)
The APG, consisting of 41 member jurisdictions, focuses on ensuring an effective implementation of international standards against money laundering, terrorist financing, and proliferation financing related to weapons of mass destruction.
UN Security Council Resolutions 1267 and 1373
The UN Security Council Resolutions 1267 and 1373 are significant in the context of international terrorism. Resolution 1267, adopted unanimously in October 1999, is a consolidated list of individuals and entities associated with Al Qaeda or the Taliban, along with the laws each member nation must implement to enforce sanctions. Resolution 1373, adopted in September 2001, recognizes international terrorism as a threat to global peace and security and imposes binding obligations on all UN member states.