WASHINGTON: Pakistan was officially placed on a terrorism financing watchdog’s grey list on Wednesday, failing the country’s efforts to avoid the designation, diplomatic sources claimed.
The report could not be confirmed independently and the FATF did not make an official announcement till late in night.
The sources said that the Financial Action Task Force (FATF) took this decision during a plenary meeting in Paris, arguing that Pakistan had failed to act against terror financing on its soil.
Being placed on the ‘grey list’ means that Pakistan’s financial system will be designated as posing a risk to the international financial system because of “strategic deficiencies” in its ability to prevent terror financing and money laundering.
After being placed on the ‘grey list’, Pakistan will be directly scrutinised by the financial watchdog until it is satisfied by the measures taken to curb terror financing and money laundering.
Thanks to the opacity of FATF’s operations, it is uncertain what exactly Pakistan is expected to do, but what is clear is that the government has taken some steps to come into compliance with the global body’s requirements, such as proscribing key groups, whose open operations were a bone of contention, and seizing their assets.
The country spent three years on the ‘grey list’ between 2012 and 2015, without the designation affecting its ability to float international bonds, borrow from multilateral bodies, receive or send remittances or conduct international trade.
The status does little more than raising the compliance burden on counterparts, such as correspondent banks, dealing with entities within Pakistan’s financial system, and therefore attaches an additional cost to many external sector transactions.
Earlier in the day, caretaker Finance Minister Dr Shamshad Akhtar urged the FATF to remove Pakistan from its grey list.
FATF is a global body that combats terrorist financing and money laundering. The decision to place Pakistan on the global money-laundering watchdog’s grey list was made during its plenary meeting in February this year.
As the FATF plenary began its proceedings on Wednesday, the Pakistani delegation apprised the watchdog of steps Islamabad had taken to stem money laundering and terror financing.
Earlier reports from Paris had indicated that Pakistan may get more time to take measures to implement the FATF’s anti-money laundering and terrorist financing regulations.
Monitoring Desk/ INP