Paris October 21 2022: Pakistan is "no longer subject to FATF's increased monitoring process; to continue to work with APG (Asia/Pacific Group on Money Laundering) to further improve its AML/CFT (anti-money laundering & counter-terrorist financing) system," states FATF
"Pakistan is on the FATF grey list since 2018, however after a lot of hard work by Pakistani authorities they have work through two separate action plans and complete a combined 34 action items to address deficiencies in their AML/CFT system. The FATF welcomed this significant progress, as a result Pakistan can now more effectively tackle AML/CFT financing" says FATF statement.
The statement added, "FATF team is very confident that reforms are in place and their is high level commitment and capacity to sustain those reforms. These reforms are good for the security and stability of the country and indeed the region."
"But that doesn't mean that there is not more work to do. Going forward, Pakistan will need to work with FATF regional partner Asia Pacific Group to continue to strengthen its systems." the statement adds on.
Removal from the FATF list would provide Pakistan a boost after the country’s sovereign credit rating was downgraded by Moody’s. It would also improve sentiment, important from a foreign direct investment perspective.
"While it would not have an impact on the country’s struggling economy as a whole, it would help reduce scrutiny of global transactions involving Pakistan", said economist and former Citigroup banker Yousuf Nazar in an interview to Reuters.
In a meeting in June, the FATF said it was keeping Pakistan on the list -- also known as the ‘grey list’ -- but said it might be removed after an on-site visit to verify progress.
Last month, the Foreign Office said a FATF technical team had conducted a “successful” visit and Islamabad was expecting a “logical conclusion” of the evaluation process in October. China has once again thwarted an Indian move in the United Nations to malign Pakistan just days before an important meeting of the Financial Action Task Force (FATF).
The first FATF plenary under the two-year Singapore presidency is taking place on Oct 20-21 in Paris. The financial watchdog is expected to consider a proposal to move Pakistan from the so-called gray list of potential violators to the whitelist.
On Tuesday, India made a move in the United States to blacklist Shahid Mahmood, who had been designated by the US in 2016 as a Lashkar-e-Taiba fundraiser. On Wednesday, India made another move to blacklist Hafiz Talah Saeed, the son of Lashkar-e-Taiba chief Hafiz Saeed.
Among other issues on the agenda, the FATF in its two-day meeting in the French capital would be examining the on-site assessment report of the technical team that visited Pakistan in September to verify the steps taken by the country with regard to implementing the plan of action.
In September, a 15-member FATF team quietly visited Pakistan, a final step before the country’s exit from the grey list. The findings of the team would be discussed in the Paris meeting.
The positive outcome of the on-site team’s findings would allow Pakistan to finally come clean over deficiencies in the system to curb money laundering and terror financing.
The official sources confirmed that the FATF team, which was given a state guest-level protocol, stayed in the country from August 29 to September 2.
The Economic Coordination Committee (ECC) of the cabinet approved a special grant of Rs7 million for the FATF Secretariat to provide the team accommodation, food and travel.
The visit was kept under wraps but the sources said the FATF delegation held meetings with the relevant authorities and verified the steps Pakistan had taken to fulfil the conditions of the watchdog.
The FATF, in June, had hinted at Pakistan’s removal from the grey list after it concluded that Pakistan complied with the 34-point plan of action and agreed to send its team for the verification of those steps.
Pakistan was listed in 2018 because of “strategic counter-terrorist financing-related deficiencies”. FATF gave the country a wide-ranging reforms programme. It was first given a 27-point action plan and later another 7-point plan to comply with the FATF’s standards.
The major stumbling block was the prosecution of certain UNSC-designated individuals accused of terror financing. Just days before the June plenary FATF meeting in Berlin, Pakistani anti-terrorism court convicted Sajid Mir in a terror financing case, something that convinced the FATF members to acknowledge Pakistan’s progress.
Pakistani officials were confident that the FATF team would give a positive assessment of the country’s progress. The officials, however, cautioned that the neighbouring country might still use its influence to drag Pakistan’s case.
The United States is believed to have played a key role in ensuring the on-site visit for Pakistan as it expressed satisfaction with the country’s measures to curb terror financing, particularly prosecuting the certain individuals.