Pakistan stays on FATF 'Grey List' subject to on-site verification

Pakistan will continue to be on the "Grey List" of countries under increased monitoring of the Financial Action Task Force (FATF), a statement from the global money-laundering and terror-financing watchdog said on Friday.

It said the country may be removed from the list after an on-site visit to verify the implementation of its reforms on countering terror-financing mechanisms.

"Pakistan is not being removed from the Grey List today. It will be removed if the on-site visit finds that its actions are sustainable," outgoing FATF president Marcus Pleyer said.

He said a formal announcement on Pakistan's removal would follow an on-site inspection, which would be conducted before October.

 

"At its June 2022 plenary, the FATF made the initial determination that Pakistan has substantially completed its two action plans, covering 34 items, and warrants an on-site visit to verify that the implementation of Pakistan's AML (anti-money laundering) and CFT (combatting the financing of terrorism) reforms has begun and is being sustained and that the necessary political commitment remains in place to sustain implementation and improvement in the future," the statement said.

The June 2022 plenary session of the FATF was held in Germany's Berlin.

The statement said since 2018, Pakistan's continued political commitment to combatting both terror financing and money laundering has led to "significant progress".

The Paris-based watchdog had included Pakistan in its "Grey List" -- a list of countries that have strategic deficiencies in their regimes to counter money laundering, terror financing and proliferation financing, but which have formally committed to working with the task force to make changes under increased monitoring -- in 2018.

Inclusion in the "Grey List" implies "strategic deficiencies" detected in a jurisdiction's policies to prevent money laundering and terror financing, according to an International Monetary Fund (IMF) working paper. This makes it difficult for a country to get financial aid from world bodies such as the IMF.

Not as severe as black-listing, inclusion in the "Grey List" shows that a country is working to remove the deficiencies that have been flagged.

Only North Korea and Iran are black-listed.

The dreaded list makes it difficult to get investors and creditors, adversely impacts exports, output and consumption and also makes it difficult for global banks to do business with a listed country.

At the meeting, Malta was removed from the "Grey List" and Gibraltar was added to it.

"In particular, Pakistan demonstrated that TF (terror financing) investigations and prosecutions target senior leaders and commanders of UN-designated terrorist groups and that there is a positive upwards trend in the number of ML (money laundering) investigations and prosecutions being pursued in Pakistan, in line with Pakistan's risk profile," the statement said.

The UN-designated terrorists based in Pakistan include Jaish-e-Mohammed (JeM) chief Masood Azhar, Lashker-e-Taiba (LeT) founder Hafiz Saeed and its "operational commander", Zakiur Rehman Lakhvi.

All three are most-wanted terrorists in India for their involvement in numerous terrorist acts, including the 26/11 Mumbai terror attack and the bombing of a Central Reserve Police Force (CRPF) bus in Jammu and Kashmir's Pulwama in 2019.

"The FATF will continue to monitor the COVID-19 situation and conduct an on-site visit at the earliest possible date," the statement said on Pakistan.

The FATF currently comprises 37 member jurisdictions and two regional organisations, representing most of the major financial centres across the globe.