FATF grey list: Pakistan despatches compliance report on money laundering

ISLAMABAD: Pakistan on Wednesday despatched a detailed reply to a Joint Group of the Financial Action Task Force (FATF) in order to share progress on curbing money laundering and terror financing in Pakistan. 

According to a report in The News, a top government official has confirmed the development. The progress report, which is 120 pages in length and has a 500-page long annex as well, will now be scrutinised in an FATF plenary meeting later this month. 

The meeting, scheduled to take place in Beijing from January 21 to 24, will give the Pakistani delegation the opportunity to defend each and every point discussed in its progress report. By mid-February, the FATF will decide whether the fate of the country with regards to FATF procedures.

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According to The News, the FATF will debate the possibility of three scenarios related to Pakistan: deciding whether to graduate the country from an FATF 'grey list' to an FATF 'white list'; whether to keep the country on the 'grey list' for another extended period of three to six months; or to put the country on the undesirable 'blacklist'.

In October last year, the FATF, a multilateral financial task force mandated with curbing money laundering and terror financing, had given Pakistan until February 2020 to improve its financial regime.

In this regard, the group had also asked Pakistan to implement a 27-point financial reform agenda to improve laws to combat money laundering and terror financing. 

The agenda had been issued at a previous meeting. 

Meanwhile, the International Monetary Fund, in its latest staff report on the country, stated that a potential blacklisting by FATF could result in the freeze of capital flows to and lower investment in Pakistan. 

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“Pakistani authorities are expecting that the FATF plenary meeting will show satisfaction over more action plans,” sources told The News on Wednesday, adding that Pakistan was making progress towards the implementation of its FATF action plan.

Pakistan is expecting that the FATF may grant another relaxation, probably up to June or September 2020, in its upcoming plenary review meeting, as the February deadline is too short a period for Pakistan to comply with the remaining 22 points on the action plan. 

Pakistan has so far successfully managed to avoid the blacklist due to diplomatic support from China, Turkey, Malaysia, Saudi Arabia and Middle East countries. 

Arch-rival India, despite intense lobbying, has failed to convince the world body that Pakistan is not cooperating with the watchdog in relation to terror financing. Pakistan requires three votes out of a total 39 members of the FATF forum to avoid falling into the blacklist.

Originally published in The News