What Pakistan’s removal from FATF grey list signifies

Source: The post is based on an article “What Pakistan’s removal from FATF grey list signifies” published in The Indian Express on 26th October 2022. 

Syllabus: GS 2 – International Relations 

Relevance: FATF grey list and Pakistan 

News: The Financial Action Task Force (FATF) has recently decided to remove Pakistan from its grey list. 

What is the Financial Action Task Force (FATF)? 

It checks global money laundering and prevents the misuse of international financial channels and instruments for terrorism and criminal activities. 

The US has relied on FATF along with the listing of terrorists in UNSC’s designated terror list in fighting against terrorism since 1998. 

How did FATF monitor the terrorist activities in Pakistan? 

Pakistan has been an important country on the list of FATF.  

FATF increased the monitoring of Pakistan over the last two decades due to the increase in terror groups and non-government organisations’ funding for these groups. 

Pakistan was put on the grey list of FATF in 2018. This led Pakistan to comply with the directions of FATF else there were chances of being blacklisted. 

The FATF monitoring requirements tightened bank regulations in Pakistan which affected the citizen of Pakistan. 

However, the FATF does not sanction states but being placed on its grey list has other consequences. 

It impacts the government’s access to international finances including assistance from multilateral agencies and from private lenders. It has also forced Pakistan to bring down cross-border terror activities.  

What India needs to do to curb the terror threat emanating from Pakistan?

The current decision of removing Pakistan from the grey list has raised concern for India as terrorists like Masood Azhar and others are still free. Therefore, India needs to fight terrorism diplomatically with the goal of making itself more stable and secure.