Pakistan Retained on FATF’s ‘Greylist’

In News

• Pakistan will continue to be on the ”Grey List” of the FATF as it needs to “further demonstrate” that action is being taken against UN-designated terrorists.

About 

• The FATF also announced the ‘greylisting’ of Jordan, Mali and Turkey, following the conclusion of the Plenary session.
• FATF observed that Pakistan needed to further demonstrate that investigations and prosecutions were being pursued against the senior leadership of U.N.-designated terror groups, which include Lashkar-e-Taiba, Jaish-e-Mohammed, al-Qaeda and the Taliban.

Background

• Pakistan has been on the FATF grey list since June 2018 and was asked to implement the FATF Action Plan fully by September 2019. 
  • It was in the same category from 2012 to 2015 too. 
• Pakistan’s inclusion in the grey list can be attributed to the fact that the country’s anti-terror laws are still not in line with FATF standards and also with the latest UN resolution 2462 that pitches for criminalising terrorist financing.

About Financial Action Task Force

• It is an inter-governmental decision-making body. It was established in 1989 during the G7 Summit in Paris to develop policies against money laundering and its Secretariat is located in Paris.
• India became an Observer at FATF in 2006. Since then, it had been working towards full-fledged membership. On June 25, 2010, India was taken in as the 34th country member of FATF.
• Functions:
  • Bring national legislative and regulatory reforms in money laundering and efforts to stop funding for weapons of mass destruction.
  • Review money laundering and terrorist financing techniques and continuously strengthen its standards to address new risks, such as the regulation of virtual assets, which have spread as cryptocurrencies gain popularity.  
  • Monitor countries to ensure they implement the FATF Standards fully and effectively and hold countries to account that do not comply with the standards.

• FATF Lists:
  • Black List: Countries known as Non-Cooperative Countries or Territories (NCCTs) are put on the blacklist. These countries support terror funding and money laundering activities. The FATF revises the blacklist regularly, adding or deleting entries.
    • Enlisted nations: North Korea and Iran.
  • Grey List: Countries that are considered a safe haven for supporting terror funding and money laundering are put in the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.

Consequences of being in the FATF Grey List

• The countries in the grey list may face
  • Economic sanctions from IMF, World Bank, ADB.
  • The problem in getting loans from the IMF, World Bank, ADB and other countries.
  • Reduction in international trade.
  • International boycott.

Source: TH