Pak stares at woes after ‘grey list’

Islamabad, July 1: Cash-starved Pakistan is set to face more financial difficulties and the cost of doing business would go up after the country was again placed on the “grey list” by a global antimoney laundering body for failing to curb terror financing, experts said.

Pakistan was placed on the Financial Action Task Force (FATF) grey list' on June 27 after it failed to put in place measures to prevent money laundering and other illegal transactions that may be used for financing terrorism.

Though the move may not hit the country immediately, its impact could be felt in the coming months as bankers said the cost of doing business would get higher and the situation for banks would become more difficult than it was during 2012-15 when the country figured in the FTAF's list, media reports said.

“Cost of doing business will be higher due to this grey list but it is manageable for banks with some difficulties,” Hussain Lawai, a banker, told Dawn newspaper. “Remember we were in the watch list from 2012-2015 but we managed to continue doing business,” he noted.

However, there is a difference this time as Pakistan's large banks like the Habib Bank, the United Bank and the National Bank are not working as correspondent banking channels. These were operating during 2012-2015 which helped trading and banking to run smoothly, the report said.

“With the grey list, large banks like JPMorgan Chase, Citibank and others will suspend credit lines which mean they would not accept letter of credits (LCs),” said Lawai.

Now the opening of Letter of Credit (LCs) to som-e extent would be difficu-lt, but still manageable, he added.

The FATF is an intergovernmental body established in 1989 to combat money laundering, terrorist financing and other related threats.