Pakistan is out of FATF ‘grey list’ on terror funding

Source: The post is based on the article “Pakistan is out of FATF ‘grey list’ on terror funding” published in The Hindu on 22nd October 2022.

What is the News?

Pakistan has been taken off the ‘grey list’ of the Financial Action Task Force (FATF) after four years.

What is the Financial Action Task Force(FATF)?

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What is the FATF Grey list?

FATF maintains a “grey list” of countries that it watches closely. In essence, these are countries that have, in the assessment of the FATF, failed to prevent international money laundering and terrorist financing, and are, therefore, on a global watchlist for bad behaviour.

Countries on the list are The Philippines, Syria, Yemen, the United Arab Emirates, Uganda, Morocco, Jamaica, Cambodia, Burkina Faso, and South Sudan, and the tax havens of Barbados, Cayman Islands, and Panama.

What are countries on the grey list expected to do?

FATF calls these countries “jurisdictions under increased monitoring”. Basically, these countries have to comply with certain conditions laid down by the FATF, failing which they run the risk of being “blacklisted” by the watchdog. Their compliance is periodically reviewed by the FATF.

Why was Pakistan taken off the grey list?

FATF has said that Pakistan had completed two action plans comprising a 34-point tasklist in the period since 2018. Based on this progress, FATF has taken Pakistan off the Grey list.

What practical benefits can Pakistan get as a result of the FATF de-listing?

There is research that suggests grey-listing negatively impacts the relationship of the concerned countries with international funders including banks and financial institutions that take note of FATF rankings as well as existing and potential overseas investors in those countries.