Pakistan is hoping for relief from FATF sanctions

Pakistan is hoping for relief from FATF sanctions
Posted on 12-06-2022

Pakistan is hoping for relief from FATF sanctions

In News:

  • Pakistan hopes for a relief as the global surveillance agency Financial Action Task Force (FATF) will begin its sessions in Berlin prior to their plenary sessions.

What's in Today's Article:

  • Financial Action Task Force (FATF) Overview, mission and black/grey-listing. Possible effects of grey-listing, India and FATF
  • News Summary

In Focus: Financial Action Task Force (FATF)

  • FATF is an intergovernmental decision-making organization that helps create policies to combat money laundering.
    • It is the world's financial crime and terrorist financing security agency.
  • It was created in 1989, during its participation in the G7 Summit in Paris.
  • The FATF Secretariat is located in the OECD headquarters in Paris.
  • There are currently 39 members in the FATF comprising members of the European Commission and the Gulf Cooperation Council.


  • FATF establishes standards and encourages efficient implementation of:
    • legal operational, regulatory, and legal strategies to combat money laundering.
    • The FATF is a body that helps identify weaknesses at the national level with the goal of safeguarding the financial system worldwide from abuse.
  • It also began dealing with virtual currency.

Grey or black-listing of countries that aren't compliant

  • From 2000 onwards, FATF has maintained the
    • FATF blacklist (formally known as"the Call for action) and
    • the FATF grey-list of the FATF (formally known as"the Other monitor jurisdictions).
  • The blacklist has prompted financial institutions to divert their resources as well as services from nations on the list.
  • This creates an obligation on government officials of mentioned countries to adopt regulations that comply with the FATF.

Potential impact of putting any country on FATF's Grey-List

  • Stimulate the economy
    • There is a belief that gray-listing could hurt a nation's economy, making it more difficult to meet its increasing requirements for foreign finance.
    • This includes future borrowings through the International Monetary Fund.
  • Could result in a downgrade of credit rating
    • Grey-listing can result in a reduction in credit rating by rating agencies.
    • It could affect a country's capacity to issue international bonds, borrow money from multilateral organizations and receive or send payments or trade internationally.
  • Increase the burden of compliance
    • The status increases the obligation to comply for all the financial institutions of the country.
    • Thus, it imposes an extra cost to many of the transactions in the external sector.
  • It is unlikely to change everything magically
    • Other experts agree it is unlikely that the FATF listing won't magically alter the world.
    • The Pakistani authorities claim they know that Pakistan was listed on the FATF grey-list from 2012 until 2015.
    • In this time it was able to successfully complete the IMF program that raised more than $5 billion from bonds markets in the world.
    • Exports and imports remained constant. This shows that the grey-listing didn't cause any significant obstacles to trade.

India & FATF

  • India was made an Observer of FATF in the year 2006.
  • On the 25th of June, 2010 India was admitted as the 34th member of FATF.

News Summary

  • The plenary session of the Financial Action Task Force (FATF) is scheduled to take place between June 14 and 17.
  • In this discussion, we will be discussed what progress has been made in a few countries that have been identified as being an imminent threat in the system of finance in relation to entities that are who are listed as grey.
    • The list of grey countries includes Pakistan along with 22 other countries.


  • Pakistan was previously included on more monitoring lists in 2008-2009 as well as 2012-2015.
    • In 2015 it has been removed from the gray list of prohibited substances through the international consensus
  • Pakistan was placed back on the grey list of the FATF in June 2018 , and was provided with a 27-point plan to conclude it.
  • Since this time, it's included in the same report since the Paris-based watchdog is not happy with the measures implemented by Pakistan to stop the financing of terror.
    • The previous calendar year Pakistan received a positive evaluation for having made significant progress in completing 26 of the 27 tasks.
    • The FATF has argued that the inability to prosecute the terrorist groups and its leaders such as Hafiz Saeed, Masood Azhar was their last task on the list.

The number of steps made by Pakistan

  • In order to finish the action plan with 27 points there were a variety of initiatives were implemented by Pakistan during the last year. This includes:
    • that led to the conviction of Hafiz Saeed and the detention of around 300 terrorists who are also designated as terrorists
    • the confiscation of over 1,100 homes owned by terror groups under the pretense of running medical, educational and charitable trusts.
    • modifications to the law to bring Pakistan's anti-terrorism Act into accordance with international standards for terrorists and
    • modifications to laws against money laundering, and the blocking of bank accounts of terrorist organizations and the leaders of them.
  • Yet, New Delhi has been doubtful of the effectiveness and long-term viability of Pakistani measures against terror up to now.
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