The Financial Action Task Force (FATF), an international regulatory body aiming to mitigate terrorism and money laundering, recently removed Pakistan from its “increased monitoring” or Grey List. Meanwhile, Myanmar was downgraded to the “Black List” following military actions during the 2021 coup. This article will delve into the implications of these changes and the organization’s broader impact.
The Financial Action Task Force: An Overview
Established in 1989 at a G-7 conference of developed nations, the FATF seeks to counteract the proliferation of weapons of mass destruction by fighting global money laundering and terrorist financing. Headquartered at the Organisation for Economic Cooperation and Development (OECD) in Paris, the FATF consists of 37 countries and two regional organizations— the European Commission and the Gulf Cooperation Council. India has been a full member since 2010, following observer status in 2006.
Greylisting and Blacklisting Explained
The FATF Plenary reviews the Mutual Evaluation Reports (MERs) of various countries three times a year in February, June, and October. If a country is found lacking in its AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) regime, it is placed on the Grey List of jurisdictions under increased scrutiny. Those that fail to address the FATF’s concerns are added to the Black List of high-risk countries. Currently, the Black List includes Iran, North Korea, and Myanmar, which are accused of supporting terror funding and money laundering activities.
Pakistan’s Removal from the Grey List
FATF commended Pakistan’s “significant progress,” observing that the country completed two action plans, incorporating a 34-point tasklist, since 2018. Consequently, it was removed from the Grey List after four years. India has previously protested Pakistan’s inaction against cross-border terror groups, yet accepted the decision based on the evidence of actions against designated terrorists. The Indian government insists that Pakistan should maintain “credible, verifiable, irreversible, and sustainable” actions against terror groups emanating from its territories.
Implications of Pakistan’s List Removal
Pakistan’s removal translates to a major reputation boost and endorsement from the international community concerning terrorist financing. Given its current economic condition, the country can potentially attract much-needed foreign investments. Conversely, despite a decrease in cross-border terrorism during Pakistan’s four-year greylisting, intermittent terrorist infiltrations and sightings of drones transporting weapons denote that the country’s anti-India terrorism infrastructure is dormant rather than dismantled. Therefore, India must continue to leverage all possible measures to curb Pakistan’s ability to utilize terrorism. Ultimately, India’s goal should be enhancing regional stability and security.
