Pakistan & FATF Grey List

Pakistan will be continued to stay in the Financial Action Task Force (FATF) till February 2021 as it has failed to fulfil few key obligations of Financial Action Task Force. It has been on the grey list since June 2018, so was asked to implement the FATF Action Plan fully by September 2019. Pakistan now has four months to complete its action plan till the next review in 2021.

Financial Action Task Force (FATF)

It is an intergovernmental organisation established in 1989 by the initiative of G7 to develop policies to combat money laundering. In 2001, terrorism financing was added into its agenda. FATF sets standards and promote the effective implementation of the measures to combat money laundering, terrorist financing and other related threats to the integrity of international financial system. Financial Action Task Force (FATF) monitors progress in implementing its recommendations through peer reviews of member countries. It has created two lists known as Black list and Grey list. In 2010, India became 34th member of FATF.

What is FATF Black list?

Those countries called as Non-Cooperative Countries or Territories (NCCT) are put in the FATF Black list, now called as “Call for action”. The countries under this list support the terror funding and money laundering activities. The FATF Black list is updated regularly. As of February 2020, only two countries were on the FATF Blacklist, these are North Korea and Iran.

What is FATF Grey list?

Those countries which are considered a safe haven for supporting the money laundering and terror funding are put under the FATF Grey list, formally called the “other monitored jurisdictions”. The inclusion of a country into the FATF Grey list suggests a warning that it may enter into FATF Black list.

Implications of being listed under Grey List

  • The country under the Grey List faces economic sanctions from World Bank, IMF etc.
  • May faces problems in getting the loans from international financial institutions.
  • Reduction in bilateral and multilateral trade.
  • May faces an international boycott.

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