At FATF plenary, Pak hopes to get off global ‘grey list’

ISLAMABAD: The Financial Action Task Force (FATF), a global money laundering and terrorism financing watchdog, starts a two-day meeting in Paris on Thursday and is expected to take up removal of Pakistan from a list of countries under “increased monitoring”.

In a meeting in June, the FATF said it was keeping Pakistan on the list - also known as the “grey list” - but said it might be removed after an on-site visit to verify progress.

Last month, Pakistan’s foreign office said a FATF technical team had conducted a “successful” visit and Islamabad was expecting a “logical conclusion” of the evaluation process in October.

It was listed in 2018 because of “strategic counterterrorist financing-related deficiencies.”

FATF gave the country a wideranging reforms programme. If removed from the list, Pakistan would essentially receive a reputational boost and get a clean bill of health from the international community on terrorist financing.

While it would not have an impact on the country’s struggling economy as a whole, it would help reduce scrutiny of global transactions involving Pakistan, said economist and former Citigroup banker Yousuf Nazar.

Removal from the FATF list would provide Pakistan a boost after the country’s sovereign credit rating was downgraded by Moody’s. It would also improve sentiment, important from a foreign direct investment perspective. The FATF says being on the “grey list” does not mean any extra due diligence measures by financial institutions, but the body does stress the need to consider associated risks when dealing with such countries.

There are currently two “black-listed” countries: Iran and North Korea. Pakistan was widely reported as being close to being “black-listed” a few years ago. A removal from the list would mark the culmination of a four-year reforms process that has required far-reaching changes to Pakistan’s financial system, in particular to laws governing money laundering and terrorism financing.

The FATF last said Pakistan has completed all items in its action plan barring one: to demonstrate investigations and prosecutions against senior leaders of UN-designated militant groups.

“When Pakistan, in recent months, announced new sentences for Hafiz Saeed and Sajid Mir - two top terrorists of Lashkar-eTaiba, one of the key terrorist groups under the FATF spotlight - that’s what got things done in the end,” said Michael Kugelman, director of the South Asia Institute at the Washingtonbased Wilson Center think-tank.

The two were allegedly involved in the 2008 Mumbai attacks in India that killed over 160 people.

Pakistan’s latest actions to jail, fine and confiscate assets of individuals linked to anti-India militant groups are key reasons it could be taken off the list, said Citibank’s Nazar.