Financial Action Task Force (FATF)
Do you know about FATF and what kind of role this financial body plays?. The FATF full form is the financial action task force which is basically an intergovernmental body. It was established in 1989 on the initiative of G7. The purpose was to develop policies as per FATF meaning to combat money laundering. In 2001, its mandate expanded and includes terrorism financing. FATF also serves as a policy which puts forward some FATF recommendations for those countries who entered into the ‘FATF GREY LIST’ to prevent the proliferation of terror financing and also money laundering. The financial body also collaborates with the international stakeholders to prevent the international financial system from misusing. To decide the fate of FATF Pakistan, the international watchdog is all set in the Paris meeting to review the progress of implementation of its 27-Targets Action Plan.
FATF Pakistan Placed On The ‘Grey List’
On February 28, 2018, The Financial action task force places Pakistan on the grey list. This proposal led by the USA and its allies sought to danger the country’s international position. The reasoning behind this is “Pakistan Structural Deficiencies” in anti-money laundering and combating the financing of terrorism.
India, the USA, and Uk wanted that Pakistan should be included in the blacklist of but China and Turkey were continuously opposing.
Pakistan was also there in 2008 and from 2012 to 2015. But now Pakistan stands out of the most prominent name on the list with the largest population and economy. If Pakistan will enter into the FATF blacklist then it will join the ranks of Iran and North Korea which are already FATF members in Blacklist. Also, it will become difficult to access funds for an already weakened. If Pakistan will enter into the whitelist, then it will easy to get financial aid from the IMF or World Bank.
FATF Pakistan needs almost 15-16 votes to move out of the Grey List. It also needs at least three votes to avoid falling into the blacklist. The FATF currently comprises 36 FATF members with voting powers.
Pakistan is striving due to increasing pressure to comply with all the 27 Financial action task force targets. But as in October 2019, it could manage to comply with only 5 targets.
- Understand the risks of counter financing terrorism by the financial sector.
- More sessions of AML and CFT for the financial institutions.
- Developing an integrated database at airports
- The mechanism to publicize selected persons and entities.
- Terrorist Financing specific units and analysis were done by the Financial Monitoring Unit (FMU) and State Bank of Pakistan (SBP).
However, China saved Islamabad who is currently in the FATF chair.
FATF Paris Meeting- Pakistan Skips Moving Into Black List
The meeting of FATF held on February 17, 2020, at Paris found country compliance on 14 targets out of 27 targets action plan. This shows that the country is making progress to observe its conditions. This progress will increase the chances of Pakistan to get another long period of three to six months. So in-short Pakistan skips descending into the Blacklist.
In January, Indian officials said that there is a good chance that FATF Pakistan could get out of the Grey List. There is effective support from China and some Western countries. Other reports claimed Pakistan may continue its existence on the FATF’s Grey List for money laundering and terror financing due to its “risk profile”.
Continuously India is trying to portray a negative image of Pakistan. It said that Pakistan extends supports terror groups like Lashkar-e-Taiba, Jaish-e-Mohammad whose prime target is India. They favored Task Force to take action against Pakistan.
After achieving 14 points on technical grounds. Pakistan needs political and diplomatic efforts to get out of the grey list.
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Will Pakistan Remain In The Grey List? – Final Decision By FATF Pakistan Plenary Meeting
On the last plenary meeting in Paris, the final decision was that Pakistan will remain on the grey list of the Financial Action Task Force till June 2020.
Turkey and Malaysia along with China supported Pakistan at the meeting but that was not enough for the country to move out of Grey List.
FATF Pakistan now needs 12 out of 39 votes in FATF to move out of Grey List. It is highly unlikely for Pakistan to manage that support in the future. According to Western diplomatic sources, It may also difficult for Pakistan to get out of Grey list for the next two-three years.
According to Chinese Official, Pakistan has made great efforts in improving its counter-terror financing system. It was appreciated by the FATF members at its latest plenary meeting in Paris. So It was decided at the meeting that Pakistan will get more time to continue implementing its action plan. So we are hoping that Pakistan must fulfill FATF recommendations. If not doing so then the country will face many difficulties as it will become unable to get any kind of financial aid.
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