FATF Grey-List and Pakistan

What is FATF?

FATF stands for Financial Action Task Force. It is an intra-governmental organization made to prevent money-laundering and terror financing globally.

Members:

FATF comprises 37 member jurisdictions and two organizations including Australia, Europe, France, Malaysia, Turkey, Saudi Arabia, India, Israel and China etc.

Grey List:

FATF releases its GRAY LIST officially as “Jurisdiction under increased monitoring”. It is a list of countries which FATF considers to be at higher risk of money laundering and terrorism financing but are committed to implement action plans to resolve AML/CFT issues. Grey-list has limited disadvantages but it could result in serious conseqences for developing countries.

Black List:

FATF black list referred to as “High-Risk Jurisdictions subject to a Call for Action”. It is a list of countries which are found to be non-cooperative and deficient in meeting global AMT/CFT standards. Countries in the black-list could face imposed sanctions and significant fall in foreign investment resulting in instability of economy.

Pakistan in the GREY List:

Pakistan was placed by FATF on its Grey-list in June 2018 for failing to implement effective measures to stop terror financing and money laundering. FATF put forward 27 action points necessary to be implemented by PAKISTAN in order to get out of Grey-list. Pakistan had an ample time of two years for implementation of these 27 action points until the next FATF meeting to reconsider issue was held in February 2020. In this meeting, FATF expressed reservations over Pakistan’s failure to complete its action plan in line with agreed timelines and in light of terrorist financing risks emanating from jurisdiction. FATF in its statement said while Pakistan had successfully implemented 14 out of 27 action points, the forum strongly urged Pakistan to implement swiftly the remaining action points by June 2020 deciding to keep country on Grey-list till next review.

In the review meeting held in October 2020, FATF stated that Pakistan had successfully implemented 21 out of 27 action points but still decided to keep Pakistan until February 2021 on Grey-list till implementation of remaining action points. Pakistan worked very hard for the implementation of remaining 6 action points and expected its name to be removed from the Grey-list. In spite of all the efforts, FATF this Thursday decided to keep Pakistan on Grey-list till June and plans to review country’s status next time in June 2021.

Actions taken by Pakistan:

Following are the actions which Pakistan took to meet FATF AMT/CFT standards:

• ·         Pakistan revised its national risk assessment policy for corporate sections.
• ·         Pakistan enhanced its custom proceedings on border.
• ·         It strengthened its internal control over banking and non-banking financial institutions, insurance companies and stock markets.
• ·   Account opening procedure require more scrutiny and previous bank accounts are verified biometrically.
  
  
  
• ·      Directorate of CBCM (Cross-Border Currency Movement) is established to manage database of currency seizures and suspicious transactions in order to curb money laundering and terror financing.
• ·        In past few months, 751 people were arrested from KPK in order to achieve targets set by FATF.
• ·      Pakistan also arrested the leader of Lashkar-e-Taiba, Zaki-ur-Rahman Lakhvi who is accused of planning 26/11 Mumbai attacks.
• ·       Leader of Jash-e-Mohammad, Masood Azhar is also arrested and is facing the legal proceedings. 

What Pakistan needs to do?

To avoid grey-listing of FATF, Pakistan should also work on diplomatic side along with technical side. Pakistan worked very hard to fulfil FATF requirements but it is still in the grey-list due to the opposition of Europe, UK, USA and India. India tried its best to black-list Pakistan but it failed due to the support of China, Turkey, Malaysia and Saudi Arabia. Pakistan need 15-16 votes to come out of gray list. So, it should also work on using diplomatic ties with member countries to pave the way out of gray list.

Nepotism of FATF:

FATF is grey-listing and black-listing the countries for being inactive towards money laundering and terrorism financing issues. But it is also rewarding the countries it wants. As we can see, India is one of the huge promoter of money laundering and terrorism financing in the South-Asian Region. In 2020, FinCEN (US Treasury Department’s Financial Crimes Enforcement Network) issued a report proving $2 trillion money laundering in which almost all banks were involved. Moreover, Dossier published by Pakistan also proves Indian terror financing in the region. Arrestation of Kalbhushan Yadav (Indian Naval Officer) from Balochistan, Pakistan, his confession statement and above all, the decision of ICJ (International Court of Justice) clearly depicts the assistance of terrorists by India. But FATF neither black-listed nor gray-listed India. Why? It is all due to nepotism of FATF and India’s strong diplomatic ties with the member countries which remain quiet on these acts of India.