Asad Tahir Jappa<\/p>\n
Nonetheless, these glad tidings of being removed from the FATF grey list mean a lot for Pakistan. Having already suffered direct consequences and economic difficulties from its time on the grey list, the removal comes as a breath of fresh air<\/p>\n
Finally, Pakistan is out of woods. Putting an end to the rumors and speculations, Financial Action Task Force (FATF) on 21st October excluded Pakistan from the grey list of the global watchdog on terror financing and money laundering after four long years. Pakistan was put on this inglorious list back in 2018 for its failure to check the risk of money laundering, leading to corruption and terror financing. With Pakistan\u2019s enlistment on the grey list, it had become increasingly difficult for the country to negotiate financial aid with the IMF, the World Bank, the Asian Development Bank (ADB), and the European Union.
\nThus, it further compounded problems for the cash-strapped country. Pakistan needed 12 votes out of 39 to exit the grey list and move to the white list. To avoid black list, it needed the support of three key countries. China, Turkey, and Malaysia are their consistent supporters. After being placed on the grey list by the Paris-based global watchdog on money laundering and terrorist financing In June 2018, it was given a plan of action to complete it by October 2019. Since then, the country continued to be on that list due to its failure to comply with the FATF mandates. However, after over four years of rigorous monitoring and effective implementation of the given tasks, Pakistan has been removed from the grey list.
\nThe official statement issued by FATF appreciated Pakistan\u2019s unflinching resolve to abide by the rules and regulations recommended by the global watchdog. It reads, \u201cThe FATF welcomes Pakistan\u2019s significant progress in improving its AML\/CFT regime. Pakistan has strengthened the effectiveness of its AML\/CFT regime and addressed technical deficiencies to meet the commitments of its action plans regarding strategic deficiencies that the FATF identified in June 2018 and June 2021, the latter of which was completed in advance of the deadlines, encompassing 34 action items in total. Pakistan is therefore no longer subject to the FATF\u2019s increased monitoring process.\u201d
\nTracing back to the genesis of this quagmire, Pakistan first figured in a FATF statement after the plenary of February 2008. At that time, FATF had noted Pakistan\u2019s recent progress in adopting anti-money laundering legislation but urged financial institutions to be aware of the \u201cremaining deficiencies\u201d that could constitute a vulnerability in the international monetary system. However, tt exited the list in 2009. Pakistan gave a \u201chigh level\u201d commitment in June 2010 that it would work with FATF and Asia Pacific Group, the regional FATF-like body, to sort out these differences. The FATF public statement of February 2012 listed Pakistan among countries with \u201cstrategic AML\/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies\u201d.
\nIn June 2015, Pakistan was \u201cno longer subject to the FATF\u2019s monitoring process under its ongoing global AML\/CFT compliance process\u201d. After three years, Pakistan was back on the \u2018grey list for the third time in June 2018. The FATF once again indicated that the \u2018action plan\u2019 should primarily look at plugging the holes in terror financing and activities of UN-designated terrorists. The action plan submitted by Pakistan had 27 points, including full implementation of the targeted financial sanctions against all UN-designated terrorists. Another seven points were added later to the action plan. Since June 2018, all the FATF plenaries have retained Pakistan on the grey list. While Pakistan\u2019s actions were deemed insufficient to leave the \u2018grey list\u2019, they were enough for it not to be bumped up to the \u2018black list\u2019. Pakistan cried foul that the FATF had been politicized, with the Pakistani Prime Minister stating that India wanted to destroy the Pakistani economy.
\nChina echoed the same sentiments by saying that \u201cpolitical designs\u201d were behind \u201csome countries which want to include Pakistan in the blacklist\u201d. In the run-up to June 2018 plenary, Pakistan amended the anti-terrorism act and clamped down on non-state actors and outfits.
\nAhead of the FATF\u2019s October 2019 plenary, Indian defense minister Rajnath Singh had claimed that the FATF would \u201cblacklist Pakistan anytime\u201d \u2013 which was seized on by Pakistan\u2019s foreign minister as an example of the politicization of the body. Since then, statements by Indian political leaders about FATF have been relatively rare. In September 2020, the Pakistan government convened a joint session of parliament and passed over a dozen legislations to upgrade the country\u2019s legal mechanism to meet FATF standards. At the time of the October 2020 meeting \u2013 the first virtual plenary in FATF \u2013 Pakistan had complied with 21 of 27 action points. Over the last year, it became abundantly clear that the main stumbling block was Pakistan\u2019s lax prosecution of various terrorists proscribed by the United Nations Security Council.
\nIn October 2021, the FATF announced that Pakistan would remain on the \u2018grey list\u2019 until it further demonstrated that action was being taken against senior leaders of UN-designated terrorist groups. At March 2022 plenary, FATF encouraged Pakistan to continue making progress in addressing \u201cthe one remaining item\u201d by undertaking financing investigations and prosecutions to target senior leaders and commanders of UN-designated terrorist groups. Just ahead of the plenary meeting in June this year, a Pakistani anti-terrorism court convicted some of the notable leaders of the militant groups which sent a clear message about the country\u2019s unfailing resolve about ensuring compliance with the FATF regime.
\nIt is pertinent to recall that Pakistan was placed on FATF\u2019s Grey List in June 2018 whereby it was found non-compliant with the recommendations of the FATF which targeted areas of risk assessment, national cooperation, targeted sanctions, preventative measures, due diligence, internal and third-party controls, law enforcement, regulation and supervision for money laundering and terror financing, amongst others.
\nA flash forward to 2022 testifies that the FATF Plenary in June, under the German Presidency of Dr. Marcus Pleyer, acknowledged the progress Pakistan made against money laundering and terrorist financing (AML\/CFT) with all 34 action points implemented. Through various bills and amendments, the Pakistani authorities diligently worked to satisfy the FATF and complied with its given tasks. These measures are related to laws against money laundering, freezing of assets and filing of cases against proscribed organizations, actions against terror financing, etc. However, the final decision to take Pakistan off the hook was conditional upon a successful on-site visit of FATF. Therefore, the FATF team conducted an on-site visit to Pakistan a few weeks back, with the purpose of inspecting the legal, regulatory, and operational reforms and procedures implemented for compliance. The analysts said that following the exit from the list, Pakistan will still be required to work with the APG (its relevant regional bodies) in the regular course of the follow-up process to make further improvements in its AML & CFT framework, as and when required.
\nNonetheless, these glad tidings of being removed from the FATF grey list mean a lot for Pakistan. Having already suffered direct consequences and economic difficulties from its time on the grey list, the removal comes as a breath of fresh air. It promises a major relief and accomplishment for Pakistan and is expected to reap multiple benefits in both, the short and long run. The immediate one carries public perception implications for Pakistan. This positive development augurs well for Pakistan\u2019s image which has recently been further dented by the downgrading of rating by International Credit Rating agencies like Moody\u2019s.
\nWith the international community and investors, in particular, the removal from the grey list is likely to strengthen Pakistan\u2019s position, especially with regard to the soundness of our financial systems, and help regain their lowering confidence. Markets are expected to react positively to this news and overall sentiment is likely to remain upbeat for a while. In the long run, this should help strengthen Pakistan\u2019s case of re-rating and upgrading by the International Credit Rating agencies. In addition, one of the structural benchmarks laid down by the IMF for Pakistan stated \u2018Adoption of measures to strengthen the effectiveness of the AML\/CFT framework to support the country\u2019s efforts to exit the Financial Action Task Force (FATF) list of jurisdictions with serious deficiencies.\u2019 This means Pakistan complies with one more structural benchmark of the IMF, paving the way for a successful ninth review which is due in November 2022 enabling the disbursement of SDR 894 million from the Fund. All in all, the watershed achievement has far more in store for Pakistan than meets the eye.<\/p>\n","protected":false},"excerpt":{"rendered":"
Asad Tahir Jappa Nonetheless, these glad tidings of being removed from the FATF grey list mean a lot for Pakistan. Having already suffered direct consequences and economic difficulties from its time on the grey list, the removal comes as a breath of fresh air Finally, Pakistan is out of woods. Putting an end to the […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[1334,8564,6421,20,8871],"class_list":{"0":"post-291085","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-article","7":"tag-asad-tahir-jappa","8":"tag-grey-list","9":"tag-implications","10":"tag-pakistan","11":"tag-removal"},"yoast_head":"\n