The Financial Action Task Force (FATF) has recently announced that Pakistan will remain on its “greylist” until a review is carried out during the upcoming June Plenary session. This decision follows the October 2020 Plenary where Pakistan was given till February 2021 to fully comply with a 27-point action plan, largely owing to challenges posed by the Covid-19 pandemic. However, Pakistan failed to meet 6 out of those 27 directives set for this deadline, which primarily pertained to curbing money laundering and terror financing.
Pakistan’s Efforts and FATF’s Response
FATF acknowledged the considerable strides made by Pakistan towards battling terrorism but highlighted that there were still three points in the 27-point action plan that the country hadn’t addressed adequately. The unaddressed points chiefly revolved around the implementation of effective financial sanctions and penalties against entities involved in illegal fundings. In the June 2021 session, FATF is set to evaluate Pakistan’s efforts, assess the longevity of its reforms and decide whether the country should continue to be on the greylist or not.
FATF’s View on Pakistan’s Anti-Terrorism Measures
The FATF has recognized Pakistan’s lack of action against numerous outlawed groups involved in raising funds for terrorist activities. These include groups connected to global terrorists such as Jaish-e-Mohammed chief Masood Azhar and Lashkar-e-Taiba’s Hafiz Saeed. India has also frequently alleged involvement of elements within Pakistan with numerous terror cases, including the 26/11 Mumbai and Pulwama attacks. Keeping Pakistan continuously on the FATF’s greylist is expected to apply pressure on the nation to take adequate measures to stop such terrorist attacks aimed at India.
Overview of the Financial Action Task Force
The Financial Action Task Force, established in 1989 during the G7 Summit in Paris, is an inter-governmental body. The organization mainly assesses the strength of a country’s anti-money laundering and anti-terror financing frameworks, focusing on systemic issues over individual instances.
Aims and Location of the FATF
FATF’s primary objectives are setting standards and promoting effective implementation of legal, regulatory and operational measures to combat money laundering, terrorist financing and other threats to the international financial system. The Secretariat of the FATF is located at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris.
FATF’s Membership and Lists
Currently, FATF has 39 members including two regional organisations, namely the European Commission and Gulf Cooperation Council. India is a member of the FATF. The greylist of the FATF contains countries considered safe havens for supporting terror funding and money laundering. This inclusion serves as a warning to the country that it may enter the more severe blacklist. Countries known as Non-Cooperative Countries or Territories (NCCTs) are listed on the blacklist for their support of terror funding and money laundering activities. The FATF revises the blacklist regularly, updating entries as required.
FATF’s Decision Making and Sessions
The decision-making body of the FATF is the FATF Plenary, which meets three times per year.