After four long years, Pakistan is now out of the Financial Action Task Force's (FATF) 'grey list' with the global watchdog stating that Islamabad would continue to work with the Asia/Pacific Group on Money Laundering to further improve its anti-money laundering and counter-terrorist financing (AML/CFT) system.
FATF said it welcomes Pakistan's significant progress in improving its AML/CFT regime. The global money laundering and terrorist financing watchdog said after its plenary here that Pakistan strengthened the effectiveness of its AML/CFT regime and addressed technical deficiencies to meet commitments of its action plans regarding strategic deficiencies that FATF identified.
Pakistan "is no longer subject to FATF's increased monitoring process; to continue to work with APG to further improve its AML/CFT," the watchdog said.
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Pakistan has been on the Paris-based watchdog's grey list for deficiencies in its counter-terror financing and anti-money laundering regimes since June 2018.
This greylisting has adversely impacted its imports, exports, and remittances and limited its access to international lending. At the June plenary, FATF retained Pakistan on its grey list and said a final decision to remove it from the list will be taken after an "on-site" verification visit.
Later in September, a FATF team visited Pakistan. The FATF issued the 27-point action plan after placing Pakistan on the grey list in June 2018. The action plan pertained to curbing money laundering and terror financing.
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What is the grey list?
Greylisting means FATF has placed a country under advanced monitoring to check its development on measures against money laundering and terrorism financing. The “grey list” is also known as the “increased monitoring list”.
As of March 2022, there are 23 countries on the FATF’s increased monitoring list, officially called "jurisdictions with strategic deficiencies", that include Syria, Turkey, Myanmar, Philippines, South Sudan, Uganda, and Yemen, among others.
This simply means that all these countries were not able to prevent international money laundering and terrorist financing and so are on a global watchlist.
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What is the Financial Action Task Force?
The FATF is an inter-governmental body established in 1989 to combat money laundering, terrorist financing, and other related threats to the integrity of the international financial system.
It meets three times every year. Delegates representing 206 members of the Global Network and observer organisations, including the International Monetary Fund, the United Nations, the World Bank, INTERPOL, and the Egmont Group of Financial Intelligence Units, participated in the Working Group and Plenary meetings in Paris.
The FATF currently has 39 members including two regional organisations — the European Commission and Gulf Cooperation Council. India is a member of the FATF consultations and its Asia Pacific Group.
