Pakistan on Grey List:
- Background: In June 2018, The FATF decided to place Pakistan on its ‘Grey list’, that is, Compliance Document for Jurisdictions Monitored by International Co-operation Review Group (ICRG).
- Meaning: Being put on the grey list means that Pakistan has been formally identified as a country with ‘strategic deficiencies’ in its anti-money laundering and counter-terrorism financing regime. These deficiencies include –
- Inadequate monitoring and regulatory mechanisms,
- Inadequate terrorism financing investigation and prosecution,
- Poor implementation of UNSC resolutions 1267 and 1373 for curbing terror financing and
- Cross-border illicit movement of currency by terrorist groups.
- Impact: The Grey listing means downgrading of the country by multilateral lenders like IMF, World Bank, ADB, EU and also a reduction in risk rating by Moody’s, S&P and Fitch.
- The resolution gave the Pakistani government a 15-month, 27-point action plan on enforcing measures to counter money laundering and financing of terrorist groups (AML/CFT regime).
Recent decisions by FATF:
- FATF has decided not to remove Pakistan from the ‘grey list’ for its failure to stop funding of terror groups, as Pakistan had lobbied for, but also did not accept an Indian demand to move Pakistan to the ‘black list’ yet.
- It urged Pakistan to swiftly complete its action plan, particularly those with timelines of May 2019. Following this, a review will be carried out in June 2019.
- The FATF criticised Pakistan for not demonstrating “a proper understanding” of the terror financing risks posed by “Da’esh (Islamic State), Al Qaeda, Jamaat-ud Dawa, Lashkar-e Taiba, Jaish-e Mohammad, Haqqani Network, and persons affiliated with the Taliban.
