The Financial Action Task Force (FATF) has decided to keep Pakistan on its ‘greylist’ until its next review in February 2021. The decision was made after a three-day virtual plenary session.
Pakistan Continues on the Grey List
After its placement on the FATF ‘Grey List’ in June 2018, the FATF issued a 27-point action plan to Pakistan related to curbing money laundering and terror financing. The International Cooperation Review Group (ICRG) of the task force recently noted that Pakistan had complied with 21 of these points since 2007. The FATF strongly encouraged Pakistan to complete the full action plan by February 2021 in order to be removed from the ‘Grey List’.
The FATF cited Pakistan’s lack of action against non-profit organizations linked to terror groups banned by the UN Security Council (UNSC) and delays in the prosecution of banned individuals and entities as reasons for its failure to meet all the points. This includes individuals such as Lashkar-e-Taiba (LeT) chief Hafiz Saeed, LeT operations chief, Zaki Ur Rahman Lakhvi, and Jaish-e- Mohammad chief Masood Azhar. Pakistan was also found non-compliant in cracking down on terror financing through narcotics and smuggling mining products including precious stones.
Implications for Pakistan
As a result of the FATF’s listing, Pakistan will face difficulties getting financial aid from the International Monetary Fund (IMF), the World Bank, and the European Union. Turkey suggested support for Pakistan’s efforts, proposing an FATF on-site team visit to finalise an assessment, but this proposal was not supported by any other member, including China, Malaysia, and Saudi Arabia.
The Stand of India
India continues to hold the position that Pakistan provides safe havens for terrorist entities and individuals. They claim that Pakistan has not taken action against many such entities, including those proscribed by the UNSC such as Masood Azhar, Dawood Ibrahim, and Zakir-ur-Rahman Lakhvi.
About the Financial Action Task Force
The FATF is an inter-governmental body established during the G7 Summit in Paris in 1989. It aims to set standards and promote the implementation of legal, regulatory, and operational measures for combating money laundering, terrorist financing, and related threats to the international financial system’s integrity. The FATF currently has 39 members, including two regional organisations: the European Commission and Gulf Cooperation Council. India is also a member.
Lists under FATF
The FATF categorizes countries into two lists. The ‘Grey List’ includes countries considered as safe havens for supporting terror funding and money laundering. The ‘Black List’ includes Non-Cooperative Countries or Territories (NCCTs) that support these activities. Being placed on the ‘Grey List’ serves as a warning that the country could be added to the blacklist. As of this year, there are only two countries on the FATF’s black list – North Korea and Iran.