Global rating agency Moody's has stated that Pakistan's continued presence on the grey list of the Financial Action Task Force (FATF) is a credit risk as far as the country's banking system is concerned.
FATF recently announced that Pakistan remains on its grey list due to its inability to meet a plan agreed upon with that organization. According to Moody's, the announcement by FATF “raises questions about potential additional restrictions relating to banks’ foreign-currency clearing services, as well as their foreign operations.”
While Pakistan remains on FATF's grey list, it runs a risk of joining countries like Iran or North Korea on the organization's black list if the organization is not satisfied with its compliance. FATF rules are meant to prevent a country's financial system from being used for activities like terror financing or money laundering.
Moody's notes that while Pakistan's compliance with international regulations has improved, the country's banking system remains at risk of losing access to foreign currency-clearing services. Such services are necessary for the cross-border payments that are used to fund imports and exports.
FATF has given Pakistan until June this year to ensure compliance with the agreed-upon plan.