The Asia Pacific Group (APG) of the Financial Action Task Force (FATF) has recently included Pakistan in the Enhanced Expedited Follow-up List, also colloquially known as APG’s Black List. This action was undertaken due to Pakistan’s consistent inability to meet FATF’s stipulated standards. Pakistan was unable to satisfy 32 of the 40 compliance parameters related to terror financing and money laundering. This is not the first instance of FATF taking stern steps against Pakistan – they were previously included in the grey list. FATF warned that should Pakistan persist in its failure to adhere to the action plan on terror financing, it might face blacklisting.
The Implications of the Blacklisting
This recent rating of Pakistan by the APG has accentuated their problems. The fifteen-month timeline for FATF’s 27-point action plan will come to an end in October 2019. Should Pakistan be unable to implement the necessary activities by this deadline, it faces possible inclusion in FATF’s blacklist in October 2019.
The APG is one of nine regional affiliates of the FATF, with India being a member of both the APG and the FATF consultations. These groups are represented by a team of officials from Indian Ministries including Finance, External Affairs, and Home Affairs.
| Organization | Action Against Pakistan | Potential Consequences |
|---|---|---|
| FATF | Grey Listing | Increased scrutiny from regulators and financial institutions, potential economic sanctions. |
| APG | Black Listing | Possible economic sanctions, restriction in global economic aid. |
Pakistan’s Risk of Making it to FATF’s Blacklist
If Pakistan fails to implement the necessary steps laid down in the FATF’s action plan, its fallout can be severe. The country may find itself enlisted in FATF’s blacklist by October 2019. Consequently, this could lead to potential economic sanctions and an overall increase in the scrutiny of their activities by regulatory bodies and financial institutions globally.
The FATF, with its nine regional affiliates including the APG, plays a crucial role in setting global standards for preventing illegal financial activities. As a member of both organizations, India’s role in these consultations, represented by a team of officials from the Ministries of Finance, External Affairs, and Home Affairs, is instrumental in shaping the global approach to combating money laundering and terror financing.
The role of the Asia Pacific Group
APG, being an affiliate of FATF, plays an essential role in maintaining the integrity of the global financial system. The recent blacklisting of Pakistan is not merely punitive but also highlights the commitment of international bodies like FATF and APG to counteract terror financing and money laundering on a global scale.
If Pakistan continues to fall short in meeting these 27 essential actions before the designated timeline in October 2019, they will risk severe global repercussions, possibly including economic sanctions and increased scrutiny over their financial dealings.
