By Staff Reporter
ISLAMABAD: Pakistan is set to see its name off the grey list of the Financial Action Task Force (FATF) after it was found to be compliant in the action plan set out by the global financial watchdog.
The decision to strike off the South Asian nation from the list after a pause of four years is likely to be taken later today when the financial crime watchdog meets in Paris.
The global financial watchdog had set out an action plan of 34 points for Pakistan, of which 27-point action plan was related to terror financing and 7-point action plan was related with money laundering.
Pakistan was placed into the grey list in June 2018. It was given just one year to comply with these 27 action plans. The country could not manage to comply within reasoned deadline. Then the Covid-19 struck and implementation on 27 action plans slowed down.
The country placed institutional mechanism to fulfill all 27 action plan and passed legislation related to strengthen laws of money laundering and terrorist financing. Then law enforcing agencies strengthened to ensure execution and conviction of proscribed organisations and their affiliates.
When Pakistan successfully implemented most of 27 action plans, the country was handed over a second action plan simultaneously and it became a unique example where two different plans were given for implementing both at the same time. In the last plenary the country was found largely compliant on both action plans.
Then the review mission visited the county last month to gauge whether the country placed institutional and other mechanisms on a permanent basis or not.
A 15-member team of the FATF visited Pakistan from August 29 to September 2, and met officials concerned about the financial system of Pakistan, including the state bank, finance ministry, after which it prepared an onsite report on the country.
The findings of the team, which included officials from the US, the UK, Australia, EU and others, were submitted and discussed during the plenary session in Paris.
Analysts said the FATF will announce its formal decision from Paris later today and it is likely that the country may be removed from the grey list. However India is opposing this move and using all its influence to extend another few months to further gauge the performance of the county.
Analyst Mohammad Sohail at Topline Securities said Pakistan not only completed the required action plans but also took action against militant groups raising chances of Pakistan’s removal from the grey list.
“If Pakistan is removed from the grey list, it would give the country boost to its image and reputation in terms of its actions to combat terror financing and money laundering,” he said.
“Though, we do not see any major up tick in foreign direct investment and other capital flows in the country due to Pakistan’s removal from grey list, however the significance of dealing with terror financing and money laundering in the last few years has increased manyfold.”
IMF has also stressed the importance of taking steps against money laundering and terror financing recently as these activities have negative consequences diverting financial flows from economically and socially productive uses. Implementation of FATF action plans was also part of a structural benchmark set out by the IMF in March which was met with a delay in June by Pakistan.
Furthermore, Sohail said if a country is not able to comply with the required action plans and is downgraded to black list, it could also face sanctions. “FATF can call international financial institutions to close their relations and association with the country.”
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