All eyes are on the Financial Action Task Force (FATF), which is expected to announce on Friday whether Pakistan will remain on the watchdog’s grey list or if the country has done enough to address deficiencies in its anti-money laundering and counter-terror financing regimes.
The announcement will be made at the conclusion of the FATF’s virtual three-day plenary session on Friday. The global money laundering and terrorist financing watchdog will review Pakistan’s progress on the 27-point action plan for addressing anti-money laundering and terror financing.
Pakistan has been on the FATF’s grey list since June 2018. The grey list comprises countries being monitored by the watchdog.
A day earlier, the Foreign Office (FO) rejected baseless reports circulating in the media claiming Saudi Arabia had voted against Pakistan at the FATF session.
“Pakistan and Saudi Arabia enjoy strong fraternal ties and the two countries have always cooperated with each other on all matters of bilateral, regional and international importance,” FO spokesman Zahid Hafeez Chaudhri had said.
The FATF plenary was earlier scheduled in June but Islamabad got an unexpected breather after the global watchdog against financial crimes temporarily postponed all mutual evaluations and follow-up deadlines in the wake of the Covid-19 pandemic.
The Paris-based agency also put a general pause on the review process, thus giving Pakistan an additional four months to meet the requirements.
In February, the FATF had given Islamabad a four-month grace period to complete its 27-point action plan, noting that Pakistan had delivered on 14 points but missed 13 other targets. On July 28, the government reported to parliament compliance with 14 points of the 27-point action plan and with 10 of the 40 recommendations.
By Sept 16, however, the joint session of the parliament amended about 15 laws to upgrade its legal system matching international standards as required by the FATF.
Pakistani officials have been hopeful of a positive outcome, especially after the recent legislation by parliament on counter-terror financing and money laundering.
The FATF places those countries on its grey list which are not taking measures to combat terror funding and money laundering. Placement on the grey list is a warning for a country that it may be put on the blacklist in case of its failure to take effective measures against money laundering and terror financing.
After being placed on the grey list, a country is directly scrutinised by the financial watchdog until it is satisfied by the measures taken to curb terror financing and money laundering. If the watchdog does not deem progress by countries on the list as satisfactory, they may be relegated to the blacklist — a list of the countries branded as uncooperative and tax havens for terror funding. These countries may face global sanctions as well.
Countries on the blacklist — or ‘high-risk jurisdictions’ — have significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation, according to the watchdog.
Inclusion on the FATF blacklist would put Pakistan in company with Iran and North Korea and mean it would be shunned by international financial institutions.