FATF   – the albatross around our necks



The danger of financial sanctions – courtesy FTAF – that has been looming on Pakistan since June last year seems to be abating, or so it seems.

The Financial Action Task Force’s (FATF) plenary meetings are taking place from February 17 to 22 in Paris. This is the first review of Pakistan by the global body- working to combat money laundering and terrorism financing – after placing the country on its grey list in June, 2018 on the grounds that its terrorism financing and anti-money laundering laws are deficient. Pakistan was previously on the FATF watch list from 2012 to 2015.

Pakistan was placed on the grey list as the result of a motion put forward by the US, France, Britain and Germany focusing on Pakistan’s failure to adhere to the international guidelines for curbing terror financing and money laundering. A total of 27 deficiencies had been identified and among these three are more important and need immediate steps. The three key deficiencies included smuggling of currency, Havala/Hundi businesses and potential terror financing of proscribed organisations.

Pakistan has taken all the five actions prescribed by the FATF ahead of its first review. Meanwhile it has been handed a 27-point action plan that it will implement till September 2019.

There are two more reviews in May 2019 and Sept 2019 before the FATF takes a decision on whether to remove Pakistan from the grey list or put it on the dreaded black list. The blacklist brings with it international sanctions and economic repercussions among other things.

There are eight proscribed organisations that have proven to be a thorn in the side of the country. Pakistan has notified all of them as per requirement as proscribed, instituted cases against them in the anti-terrorism courts besides making efforts to stop their funding channels. However prosecutions and convictions are the areas that remain of concern to the FATF.

To be where Pakistan is today, Pakistan formed a National Executive Committee led by Finance Minister Asad Umar to work in cooperation with other relevant institutions to address FATF challenges – to comply with 40 recommendations of the FATF, to be precise.

In order to avert the penalty, Islamabad has been scrambling, given that any such move could hurt its economy. There is a long list of negative effects of the grey list that could dampen trade and economy. Among major setbacks, Pakistan’s international credit rating could suffer a lot as a result of being placed on the list, as several global financial institutions are influenced by the FATF, which include around 700 members in total, including the United Nations, European Commission, International Monetary Fund and World Bank.

The government this time is confident that Pakistan would be off the gray list. We hope and pray it does.