Pakistan taken off from FATF grey list


After four years, Pakistan has been removed from the dreaded grey list of the Financial Action Task Force (FATF), the global watchdog on terror financing and money laundering, as a result of Islamabad’s “high-level political commitment” to addressing the threat and reforming its existing monitoring mechanism. For the first time, the FATF designated Myanmar as a “high-risk jurisdiction subject to a call for action,” also known as the watchdog’s blacklist. Iran and North Korea remain on the list.
Other decisions barred Russia from participating in future FATF projects. The Financial Action Task Force (FATF) said in a statement that it appreciates Pakistan’s considerable advancements in enhancing its anti-money laundering and counter-financial-terrorism (AML/CFT) regime. The FATF made the decision during its plenary meeting in Paris on October 20-21. Later, at a virtual press conference, FATF president T Raja Kumar, who is from Singapore, stated that Pakistan has largely addressed all 34 FATF recommendations.

“The FATF looked into the mechanism put in place by Pakistan to combat financial terrorism and money laundering. The team went down to Pakistan and found the high level political commitment of Pakistan not only act to combat financial terrorism and money laundering but ensuring reforms and strengthen the system,” he said. 

Kumar stated that Pakistan has made significant progress in combating financial terrorism and money laundering, which has contributed to Pakistan being removed from the increased monitoring mechanism, also known as the grey list. However, he stated that Pakistan must continue to work in this area, and the FATF urges Pakistan to work with the FATF’s Asia Pacific Group to combat financial terrorism and money laundering.

According to the FATF statement, Pakistan has strengthened the effectiveness of its AML/CFT regime and addressed technical deficiencies to meet the agreements of its action plans regarding strategic deficiencies identified by the FATF in June 2018 and June 2021, the latter of which was accomplished ahead of the deadlines, spanning 34 action items in total.

“Pakistan is therefore no longer subject to the FATF’s increased monitoring process. Pakistan will continue to work with APG to further improve its AML/CFT system,” the statement said. With Pakistan’s exit from the “grey list”, Islamabad may now try to get financial aid from the International Monetary Fund (IMF), the World Bank, the Asian Development Bank (ADB) and the European Union (EU), to boost its cash-strapped economy. 

Regarding Russia, Kumar stated that the move follows Moscow’s invasion of Ukraine. He stated that Russia’s actions continued to violate FATF’s core principles, which aim to promote financial system security, safety, and integrity. The FATF discovered deficiencies in Pakistan’s legal, financial, regulatory, investigation, prosecution, judicial, and non-governmental sectors to combat money laundering and terror financing in 2018, which are considered serious threats to the global financial system.

Pakistan had completed the majority of the action items assigned to it by the FATF in 2018, with only a few items remaining unfulfilled, including its failure to take action against UN-designated terrorists such as Jaish-e-Mohammed (JeM) chief Masood Azhar, Lashker-e-Taiba (LeT) founder Hafiz Saeed and his trusted aide and the group’s “operational commander,” Zakiur Rehman Lakhvi.

Azhar, Saeed, and Lakhvi are India’s most wanted terrorists for their roles in a number of terror attacks, including the 26/11 Mumbai terror attacks and the 2019 bombing of a Central Reserve Police Force (CRPF) bus in Jammu and Kashmir’s Pulwama. From August 29 to September 2, a 15-member joint delegation of the FATF and its Sydney-based regional affiliate, Asia Pacific Group, visited Pakistan to verify the country’s compliance with the FATF’s 34-point action plan.

The Democratic Republic of the Congo, Tanzania, and Mozambique have been added to the grey list, while Nicaragua and Pakistan have been removed.

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