Pakistan out of FATF gray list, India expressed displeasure

On Wednesday 19 October, the Financial Action Task Force (FATF), a Paris-based organization that monitors terror financing, has taken Pakistan out of the gray list, due to which India has expressed strong displeasure. Expressing its displeasure, India said that it is a black spot in the fight against terrorism.

Kashmir’s Lieutenant Governor Manoj Sinha has also commented on Pakistan’s move to be left out of the FATF list. In a conversation with a private TV channel, he said that our neighbor is not happy with the peace in India. The world is watching which country is supporting terrorism. Our Ministry of External Affairs (MEA) is alert and takes appropriate action.

Included in the gray list since June 2018

Let us tell you that Pakistan was included in the gray list by FATF in June 2018. The FATF at that time considered terrorism to be a major threat to the world’s financial system, including mis-funding, irregularities, lack of investigation, money laundering in non-governmental organizations. The FATF had earlier asked Pakistan to work on 27 points. After this these points were increased to 34 and then to 40. Pakistan is now eagerly waiting for the results of the discussions to be held in Paris.

Singapore has the presidency

Let us tell you that the FATF Presidency is with Singapore for two years. IMF, UN, World Bank, Interpol and Financial Intelligence Unit are also included in the list of 206 members. At the same time, this meeting will last for two days.

During this, it will also be investigated which countries are at risk of the international financial system. The media will also be informed about this. Most of the focus will be on transparency.

Pakistan was included in the gray list in June 2018. He is facing charges of money laundering, terror funding and weak law making. The FATF had said that because of Pakistan, the global financial system could be in danger.

At a meeting in June, the FATF said it was keeping Pakistan on the gray list, but it could be removed after visiting the site to verify progress.

What does this mean for Pakistan?

Pakistan was listed in 2018 due to “strategic counter terrorist financing-related deficiencies”. If Pakistan is removed from the gray list, then Pakistan will get a reputation and may also get a clean chit from the international community on terrorist financing.

Economist and former Citigroup banker Yusuf Nazar said that although it would have no impact on the country’s struggling economy, it would help reduce scrutiny of global transactions involving Pakistan.

Two large Pakistani banks, HBL and National Bank of Pakistan, paid $225 million in 2017 and $55 million in 2022, respectively, in fines imposed by US regulators for compliance failures and anti-money laundering violations.

Pakistan’s removal from the FATF list will get a boost after Moody’s downgraded the country’s sovereign credit rating. It will also improve sentiment, important from the point of view of foreign direct investment.

What was involved in the program?

Pakistan’s removal from the list will be part of a long four-year reform process that requires far-reaching changes in Pakistan’s financial system. At the same time, especially for laws governing money laundering and funding of terrorism, it will prove to be an important milestone.

Pakistan was given an action plan by the FATF in 2018 to coordinate and reorganize law enforcement and financial institutions.