The FATF is an inter-governmental organization founded in 1989 on the initiative of the G7 countries to develop policies to combat money laundering but its mandate was expanded to include terrorism financing in 2001. FATF’s headquarter is in Paris, France. Grey list of FATF is formally called “Other Monitored Jurisdictions”. If a country comes under this list, it means that situation is not so worse and we just need to keep strong surveillance. FATF’s black list is very strict and formally known as “Call for Action”. If a country comes under it, it means the situation there is worse and it needs a call for action and this action will be taken by a team of the United Nations.
In October 2019, FATF reviewed Pakistan and decided to keep Pakistan on its grey list for failure to curb funding to terrorist groups. In February 2020 too, the team reviewed Pakistan and once again decided to keep it in the grey list till next review in June 2020. But due to the Coronavirus pandemic, FATF didn’t review Pakistan in June 2020. And now in October 2020, due to some obligations, it has decided once again to keep Pakistan on the grey list till the next review in February 2021.
This is not the first time that Pakistan came under FATF’s grey list. Pakistan was put on FATF’s grey list in June 2018 for the second time in six years and was given a 27-point action plan to accomplish in order to come out of the list. In case of any deficiency, it would remain on this list.
On the decision to keep Pakistan in the grey list or the list of “Jurisdictions under increased monitoring”, President FATF Marcus Pleyer said, “Pakistan has made progress across all action plan items and has now mostly addressed 21 out of 27 action items and as all action plan deadlines have expired, the FATF strongly argues Pakistan to swiftly complete its full action plan by February 2021.”
The failed obligations due to which FATF kept Pakistan on its grey list are lack of action against the charitable organizations or non-profitable organizations linked to the terror groups banned by the Security Council of the United Nations. Another obligation is delay in the prosecution of banned individuals and entities. Yet another point raised by FATF was that Pakistan was found non-compliant in cracking down on terror financing through narcotics and smuggling of mining products. They also showed concern about the 4,000 names that were on Pakistan’s Schedule-4 list under the Anti-Terrorism Act up to January, but went missing in September 2020. Due to all these obligations, they have decided to keep Pakistan on its grey list till February 2021.
Effects of being on FATF grey list is downgrading by IMF, World Bank, Asian Development Bank and European Union. Pakistan’s retaining in this list means it would be very difficult for it to get loan from them.
Still we can say that Pakistan has done extremely well to address these action plans, even during the corona pandemic and yes, of course, it’s a disappointment for those who wanted to see Pakistan in the black list of FATF.