Pakistan remains on FATF's grey list

  • Pakistan continues to remain on Financial Action Task Force or FATF's grey list even as it is still to implement its action plan. 
  • The country has to work towards complete implementations till the next FATF plenary meet that will take place in which will take place from October 17 to October 22. 
  • Pakistan was put on the FATF grey list in June 2018.
  • Being on the grey list is a signal that money in the country is being used for financing terrorism. 
  • This impacts foreign investment flow in the country impacting the economy. 

FATF

  • The FATF is a global watchdog for money laundering and terror financing. 
  • The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. 
  • As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
  • The organisation was established by the G-7 Summit that was held in Paris in 1989 in response to mounting concern over money laundering.
  • Originally comprising 16 members, the FATF has since expanded to 39 members. 
  • Headquarters: Paris, France.
  • The Purpose of FATF is to combat money laundering and terrorism financing.
  • The FATF Plenary, it's decision-making body, meets thrice a year.

GREY & BLACK LIST

  • The terms 'Grey List' and 'Black List' don't officially exist in FATF parlance.
  • Instead, you have "Jurisdictions Under Increased Monitoring” and “High-Risk Jurisdictions subject to a Call for Action”.
  • The FATF places a country on the 'Grey List' as a final warning to get it to comply with its directives.
  • If a country still refuses to comply, it will be blacklisted by the organisation or be put on the 'Black List’. 
  • Nineteen countries including Pakistan have been placed on the FATF 'Grey List’.
  • Only two countries have been placed on the 'Black List': Iran and North Korea.

PAKISTAN

  • Over the past 12 years, Pakistan has been placed on the 'Grey List' thrice. 
  • Most recently in June 2018, when the FATF urged Islamabad to implement a 27-point action plan to curb money laundering and terror financing by the end of 2019. 
  • However, the deadline was extended due to the coronavirus pandemic.
  • In February, the FATF gave a fourth extension to Pakistan to fully implement a 27-point action plan and "strongly urged“ it to meet the remaining three conditions. 
  • According to estimates by the Pakistani government, greylisting of Pakistan at FATF is causing damage of around $10 billion annually to the country.

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