Pakistan Inching Towards FATF's 'Dark Grey' List
IndraStra Global

Pakistan Inching Towards FATF's 'Dark Grey' List

By IndraStra Global News Team

Pakistan Inching Towards FATF's 'Dark Grey' List

According to the latest reports, Pakistan is in trouble with adverse review reports which will come up for discussion this week at the ongoing Financial Action Task Force (FATF) plenary session (which was convened on October 13, 2019, in Paris).

In a statement ahead of the plenary a FATF statement said that the areas of discussion would include "Progress by Iran, Pakistan and other countries that present a risk to the financial system". 

Pakistan's Minister for Economic Affairs Division Hammad Azhar, who is heading the delegation, will present Pakistan's compliance report (finalized by the Securities and Exchange Commission of Pakistan (SECP)) that details the measures taken by the government to curb terror financing and money laundering, in accordance with FATF's guidelines. The comprehensive guideline developed by the Commission has helped financial institutions to generate 219 Suspicious Transactions Reports (STRs) in one year, as compared to 13 STRs in eight years. FATF will finalize its decision on Pakistan on Friday, October 18.

According to FATF rules, there is one essential stage between 'Grey' and 'Black List', referred to as 'Dark Grey' - which means the issuance of a strong warning so that the country concerned gets one last chance to improve. Sources indicate that Pakistan is on the verge of strong action by FATF, given its inadequate performance, whereby it managed to pass in only 6 of 27 items. 

If Pakistan continues with the 'Grey' or put in 'Dark Grey' list, it would be very difficult for the country to get financial aid from the International Monetary Fund (IMF), the World Bank and the European Union, making its financial condition more precarious. This would be the first Plenary under the Chinese Presidency of Xiangmin Liu.

India, UK, the US, France, and many other nations have been consistently pushing for action against these terror networks and terrorists but to no avail. Friday will be crucial for Pakistan. For now, it is trying very hard to get off the grey list and India is working the channels to ensure the blacklisting process is initiated.

But, with support from China, Malaysia, and Turkey; Pakistan may not be blacklisted since only a minimum of three votes are required to prevent a blacklisting at FATF but to get off the grey list, Pakistan would require the support of 15 nations which it does not have as of now.

About the Financial Action Task Force (FATF)

Since 1989, the Financial Action Task Force (FATF) has been at the forefront of international efforts to fight money laundering and combating the financing of terrorism (CFT). It is an intergovernmental organization founded on the initiative of the G7 to develop policies to combat money laundering. In 2001 its mandate expanded to include terrorism financing. It has 37 members, including two institutions, the European Commission and the Gulf Co-operation Council. In addition, it has two observers and nine associate members, which are primarily regional organizations. Do note, FATF "has no investigative authority." FAFT works with nation-states to bring legislative changes and regulatory reforms in the aforementioned sectors.