The Financial Action Task Force (FATF) Global terror watchdog agreed to retain Pakistan on a grey list. It is with the status of Pending Tasks for Pakistan to avoid FATF Grey List, next scheduled for consideration in an exceptional meeting held in June 2021.

The global body stated in a briefing at a comprehensive session in Paris that “the FATF firmly calls on Pakistan to quickly complete their full action plan by June 2021.” This is Pakistan’s second four-month expansion to the execution of the negotiated action plan.

Till the next analysis of development in June, the global watchdog agreed to keep Pakistan on the grey list.

The FATF President Dr Marcus Pleyer announced the results of the 4-day virtual meeting of the FATF at a press conference from Paris.

Pleyer added that, while Islamabad had made “substantial strides,” certain “significant flaws” remain in structures to avoid terrorist funding, “Pakistan remains under further control.”

“The action plan decided by Pakistan must be thoroughly discussed in three of 27 regions,” he added.

The President of the FATF said when clarifying that Pakistan has made “progress”: “We firmly advise Pakistan to finalize its programme.”

Reasons Why Pakistan Is Still On The FATF’s “Grey List”

Before the verdict, the Global Agency held a three-day session to examine Islamabad’s development in anti-money laundering and international terrorism initiatives.

However, at the end of the session, it was finally agreed that Pakistan needed to work on three of the 27 issues raised by the Paris-based FATF and that it would remain on the grey list until June.

What is FATF?

FATF is a French-named international organisation that was established in 1989 and also known as the Financial Action Group (GAFI). At the strategy of the Group of Seven or the Bloc of the G7, the anti-money laundering watchdog was set up to deal with money laundering.

Following the 9/11 terrorist attacks, its role was further emphasized and its processes increased and terrorist financing was included within its scope.

There are two lists in the World Watchdog — one blacklist and one grey list, with the former states, found to be uncooperative in the worldwide campaign to reduce cash laundering and terror funding.

The grey list includes nations that have considerable risks of financial fraud and terror funding but have demonstrated the opportunities to develop close to address their shortcomings.

How will Pakistan be excluded from the grey list?

Pleyer claimed that if Pakistan can operate on the six pending points by the next plenary, an on-site visit would be made to validate them.

If the countries involved are pleased, Pakistan will be able to withdraw itself from the grey list by the next committee hearing, which will take place in June 2021. The legislative year of the FATF extends from July to June.

However, according to Pleyer, a simultaneous mechanism is underway under the Asia-Pacific Community on Financial Fraud (APG), which will decide on Pakistan’s success on black money.

Pending Tasks for Pakistan to get out of FATF Grey List

Pakistan can proceed to focus on the three questions given in its planning process to resolve its strategically relevant shortcomings, namely:

1. proving that TF inquiries and trials target individuals and organizations working on behalf of or under the behest of the identified individuals and entities;
2. showing that TF proceedings result in successful, equitable, and divisive sentences; and
3. showing that TF convictions result in effective, justifiable, and divisive sentences.

Increase Tracking of Money laundering

As a result of Pakistan’s inability to curb terror funding, Pakistan is one of 18 countries on the grey list. This undoubtedly has cost the Islamic nation tremendously politically, with foreign companies becoming more careful to invest in it.

Whereas Pakistan’s attempts to attain the mandate set by the FATF have been registered, it is considered inadequate for the department.

FATF President Marcus Pleyer claimed in an online press briefing from Paris that although the Pakistani government has advanced “significantly” there remained “extreme shortcomings” in money laundering and the funding of terrorism.

Firm Action Against Terrorist

The reluctance of the nation to take action against all UN-designated terrorists was one of the significant reasons that FATF refused to delete Pakistan from the grey list.

What is Pakistan’s position?

In several of the above regions, Pakistan should be able to please foreign financial organizations such as the FATF and the APG.

Pakistan appears to be taking proactive actions in response to the enforcement of some UNSC resolutions, focuses on actual call for action against forbidden groups and following the military’s Radd-ul-Fasaad activity.

Any entrepreneur or banker in Pakistan will inform you that any major cross-border money transaction made via traditional banks now needs valid reasons and written evidence.

Pakistan has a strong and quite well business & financial market, as can be thought by others around the world.

However, it is not obvious how successful the trial process has been and how many prosecutions have been secured in support of AML/CFT lawsuits in Pakistan. It is an evolved trait and Pakistan cannot be predicted to succeed at the standard of Member countries within a few years.

Legal framework, awareness-raising for prosecutors and judges, and improving agencies such as the State Bank, the Federal Investigation Department, the Anti-Narcotics Force and the National Accountability Bureau are long and tedious, costly and computationally expensive operation.

Response from Pakistan Government on FATF Grey List

Pakistan has been working hard to improve its AML/CFT mechanism and resolve strategic anti-terrorist funding vulnerabilities, the finance ministry said. In response to the FATF’s acknowledgment in its plenary declaration that Pakistan has substantially improved on the whole plan of action by coping with 24 of the 27 items in the implementation plan, the three remaining areas have also been significantly strengthened by Pakistan, which has also been partially covered.

Final Word

The international organizations should help the country, by exchanging international standards and learning from other domains rather than placing foreign pressure on The government to be placed on the watch list.

Pakistan was at the frontline of fighting terrorism and will prosper from a constructive approach from foreign partners rather than a restrictive response. The pending tasks for Pakistan to avoid FATF grey list should be the local government’s action plan until its next meeting in June.