New Delhi: Amid the tensions between India and Pakistan, the Finance Ministry will soon demand that Pakistan be put on the Financial Action Task Force (FATF) grey list, according to several media reports. Also, India’s executive director at the International Monetary Fund (IMF) will present the country’s position at a board meeting of the multilateral agency and discuss the loan to Pakistan. Let us look at instances when Pakistan was put on the FATF Grey List.
A Chronological Overview of Pakistan’s Greylisting
February 2008
On February 28, 2008, Pakistan was added to the Financial Action Task Force (FATF) grey list because it did not meet international standards for preventing money laundering and financing terrorism. Pakistan was placed on the grey list mainly because it failed to identify and prosecute people and groups involved in funding terrorism.
February 2012
On February 16, 2012, the Financial Action Task Force (FATF) added Pakistan to its grey list. This happened because the country was not fully meeting international standards for stopping money laundering and terrorist financing.
June 2018
On June 28, 2018, Pakistan was placed on the Financial Action Task Force’s (FATF) “grey list”. This happened because Pakistan did not effectively stop funding for terrorism, according to the FATF. The FATF pointed out that Pakistan has problems in its system, especially in its ability to deal with terrorist financing and money laundering.
August 2018
On August 16, 2018, the Asia Pacific Group (APG) pointed out problems related to the Financial Action Task Force (FATF) in Pakistan’s action plan. This review took place after a 12-day inspection. Pakistan was put on the FATF’s “grey list” for increased monitoring on June 28, 2018, because of concerns about its efforts to fight terror financing. The APG’s inspection showed that Pakistan had not properly addressed the issues raised by the FATF.
March 2019
On March 8, 2019, Pakistan was already on the Financial Action Task Force (FATF) grey list. This means that the FATF was closely watching Pakistan because it had problems with its systems preventing money laundering and fighting terrorism financing.
July 2019
On July 25, 2019, Pakistan remained on the Financial Action Task Force (FATF) grey list. This meant that the FATF was still closely watching Pakistan because it had not done enough to stop money laundering and terrorism financing.
October 2019
On October 18, 2019, the Financial Action Task Force (FATF) kept Pakistan on its grey list. They urged the country to complete its action plan by February 2020. Pakistan avoided being blacklisted, but the FATF gave strong warnings and continued to watch the country’s efforts to fight money laundering and terrorism financing.
February 2020
On February 21, 2020, the Financial Action Task Force (FATF) continued to keep Pakistan on its “grey list” of jurisdictions under increased monitoring, commonly referred to as the “grey list.” This decision followed a period when Pakistan failed to address deficiencies in its anti-money laundering adequately and countering terrorism financing (AML/CFT) regime. The FATF urged Pakistan to continue its efforts to complete the action plan and meet the benchmarks set by the organisation.
What is the Financial Action Task Force (FATF)?
The Financial Action Task Force (FATF), or Groupe d’action financière (GAFI) in French, is an international organisation started in 1989 by the G7 to create policies against money laundering. In 2001, it also began tackling terrorist financing. The FATF Secretariat is located at the OECD in Paris, but the two organisations operate independently.
FATF aims to set standards and encourage countries to implement laws and actions to fight money laundering, terrorism financing, and other threats to the global financial system. It serves as a policy-making body that seeks to inspire governments to pass laws and regulations in these areas. FATF checks the progress of its guidelines through reviews known as “mutual evaluations” of its member countries.
Since 2000, FATF has maintained a blacklist known as the “Call for Action” and a greylist called the “Other monitored jurisdictions.” Being on the blacklist often causes financial institutions to withdraw resources and services from those countries. This pressure can push local leaders in the listed countries to urge their governments to adopt FATF-compliant regulations.
