FATF removes Pakistan from its grey list

FATF removes Pakistan from its grey list. The Financial Action Task Force (FATF) has announced the removal of Pakistan from its grey list, appreciating the country’s efforts in anti-money-laundering and anti-terror financing.

According to a statement issued by the FATF, they applauded Pakistan’s efforts to curb terrorist financing and meet all the requirements ahead of time.

FATF had given Pakistan a 27-point action plan to implement to get out of the grey list in 2018. Pakistan completed all 27 points ahead of time in June 2022.

However, in June 2021, FATF issued a second action plan, which was to be completed until January 2023. Pakistan completed all of the combined 34 points ahead of time in June 2022.

Read more: Hina Rabbani to lead Pakistan’s delegation at FATF plenary meeting

FATF appreciated the country’s efforts in fulfilling all 34 action plans and has now announced the removal of Pakistan from its grey list.

WHAT IS THE FATF?

To simplify things, FATF has three basic purposes:

To curb money laundering

To stop terror financing

To counter financing of weapons of mass destruction

WHAT IS FATF’s GREY LIST?

The greylisting of any country by FATF means that it has been placed under increased monitoring to oversee its progress on measures against terror financing and money laundering.

The countries then have to increase efforts and take measures against the above-mentioned topic to be removed from the unwanted watchlist.

Pakistan has had a complicated relationship with the FATF, and it is not the first time the country has found itself on the grey list.

Pakistan had been on the undesired list three times. We were first put on the list in 2008 but were removed in 2012. FATF put Pakistan on the grey list once again in 2012 but was removed in 2015. However, the third stint starting in 2018 has been the longest time period Pakistan has spent on the FATF grey list.

Below are some of the effects being grey listed causes:

Donor organizations like World Bank and IMF are hesitant to provide any financial assistance

The economy starts shrinking as investors are reluctant to invest in a country with a fragile economy

Lack of investment causes bearish trends in the stock market

The local currency starts losing its value, causing a rise in inflation, the trade deficit

Trade suffers as other countries avoid engaging with grey-listed countries.