Paris based Financial Action Task Force (FATF) is mulling to place ‘grey’ listed Pakistan in the ‘dark grey’ list which is seen as the last warning to improve its records. This decision is being taken in the ongoing three plenary meeting of FATF taking place from October 13- October 18, this year.
Pakistan is on the verge of being penalised strongly for its lack of action against the terrorist groups operating from it’s soil, whereby it managed to pass in only six of 27 items, an official privy to the development said.
According to the Officials attending the ongoing FATF meeting in Paris, the grouping was dissatisfied with Pakistan’s performance and it was isolated by most members for not doing enough, a PTI report from Paris stated. This follows a mutual evaluation report by the FATF’s Asia Pacific Group finding Pakistan fully compliant only on one of 40 recommendations put up by the FATF to curb the flow of finances to terrorists and terrorist organisations.
However, the final decision of the FATF is expected on October 18 when the meeting concludes.
According to the FATF rules, there is an essential stage between “grey” and “black” listing which is referred to as “dark grey”. Grey denotes a strong warning so that the country concerned gets one last chance to improve, an unidentified official quoted by PTI said.
Pakistan was placed on the Grey List by FATF in June 2018 and was given a plan of action to complete it by October 2019, or face the risk of being placed on the black list with Iran and North Korea (Iran and North Korea are currently placed in the black list).
What is FATF?
The FATF is an independent inter-governmental body established in July 1989 that develops and promotes policies to combat money laundering, terrorist financing and other related threats to the integrity of the international financial system. The countries which support terror funding and money laundering are listed in the grey list.
The FATF was, however, established by a Group of Seven (G-7) countries in a Summit held in Paris. Initial motive of FATF was to examine and develop measures to combat money laundering.
In October 2001, the FATF expanded its wings to incorporate efforts to combat terror financing, money laundering and human trafficking. Additional reports suggest that there are two types of lists; Black List and Grey List.
Black List consists of only those countries that FATF considers as uncooperative tax havens for terror funding. These countries are known as Non-Cooperative Countries or Territories (NCCTs). In other words; countries which are supporting terror funding and money laundering activities are listed in the Black list.
The Grey List consists of those countries which are not considered as the safe heaven for supporting terror funding and money laundering. The inclusion in this list is not as severe as black listed. Grey list, moreover, is a warning given to the country that it might come in Black list if it is unable to curb the rapid growth of terror funding and money laundering.
When a country comes in the Grey list, it faces many problems like Economic sanctions which include getting loans from international institutions (IMF, World Bank, ADB, etc.) and countries, overall Reduction in its international trade, International boycott etc.
Notably, Pakistan was included in the grey list for the first time in 2012 and remained in it till 2015. On 29 June, 2018 FATF Grey listed Pakistan for the second time. The process began in February 2018 when FATF approved the nomination of Pakistan for monitoring under its International Cooperation Review Group (ICRG) commonly known as ‘grey list’.
Pakistan was then asked to prepare a plan to address international body’s concerns and get its approval to get included in the black list again. However, the FATF updates the blacklist regularly, adding or deleting entries.
In any case, keeping the consequences in consideration of being places in the dark grey list, it should be discernible for Pakistan to be worried about its latest listing.