FATF AND PAKISTAN: WHAT IS THE FUTURE?

FATF and Pakistan: Financial Action task force (FATF) is a global institution and it was founded in 1989 by a group of Seven (G-7) summits in Paris and its headquarter is located in Paris city of France. There are currently 39 member countries of FATF including Pakistan. FATF current president is Marcus Pleyer. Objective of FATF is to keep an eye on money laundering and globally terrier and it is an independent inter-government body that set and executes policies to protect the world from illegal activities like money laundering and terrorism financing. There are three categories in FATF which shows status of a member countries to control illegal activities. FATF three categories are White list, grey list, and blacklist. White listed member countries are those countries that have completed action plans set by FATF and eliminate illegal activities, grey list is basically a danger zone for all those member countries who have failed to execute or to implement action plan points of FATF and blacklisted countries are those who have totally failed to execute action plans.

Currently, there are 19 member countries including Pakistan that are listed in the grey list. Since June 2018 Pakistan is in a grey list by FATF financing watchdog. According to February 5, 2021 dawn newspaper Pakistan completed 24 out of 27 action points. Pakistan is also working remaining 3 points with the help of FATF recommendations. FATF president Dr. Marcus player announced that Pakistan will remain under increase monitoring of the watchdog. Further, he added that Pakistan had made “Significant progress” and the watchdog will verify the sustainability of reforms and discuss plenary in June 2021. Pakistan submitted the 3rd progress report on February 2021 which is still under evaluation. According to the 5th June 2021 dawn newspaper Pakistan’s rating on FATF recommendations are getting better.

So, currently, Pakistan is working on remaining action plans with the recommendation of FATF to control money laundering and terrorism financing and to come out from the grey list to white list. It is a rule in FATF to fall or come out from Grey and black list into the white list, For Grey listed member country needs at least 12 favour votes of member countries to come out from Grey list to white list whereas for blacklist, no any country can be blacklisted until and unless that have at least 3 favour votes of  member countries and that member country will stay in the Grey list, in other words for the Grey listed country should need three favour voted from a member country to stay in the Grey list whereas to come out from Grey list country will  needs at least 12 votes.

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What are the consequences, if any country is blacklisted by FATF?  Firstly, all international financial institution like IMF, Asian Development Bank and the World Bank, all are directly and indirectly observers of FATF and the blacklisted country couldn’t get any financial assistance from these internal financial institutions. Secondly, the Economy of the blacklisted country will suffer a lot. Specially the Business sector, industrial and trade because they need to use banks for transaction. Black listed country has a weak banking system that’s why it is listed in blacklist. Due to all this, Banks and other financial institutions will become risky institutions at an international level and other countries will not trade with the blacklisted country, in return black listed country pays the high cost of business transactions. Overseas citizen of black listed country will also face many disturbances while sending or receiving money from the country. In result that blacklisted country will remain isolated in this world.

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The writer is Master in Business studies from Quaid-i-Azam School of management Sciences (QASMS),Quaid-i-Azam University, Islamabad. Keeps interest in National, Regional and Global politics of Liberal thoughts and politics of possibilities.

He can be reached at: zulqarnain.jalbani786@gmail.com

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