Pakistan's fate hangs in balance as FATF week begins, to take up 'grey list' matter on October 18

Financial Action Task Force (FATF), the international terror financing watchdog is looking forward to take a strict action against Pakistan. With the country being on the verge to find its way onto the ‘Dark Grey’ list on October 18, the present situation signals the last warning to the nation to improve and stop money laundering and terror financing.

Established in 1989, FATF is an inter-governmental body that works with the objective of curbing money laundering, financing terrorism and other kinds of threats that can challenge the integrity of the international finance system.

An official privy by FATF says Pakistan has shown only an inadequate performance after being put on the grey list in June last year. The country was also given a plan to complete by October 2019 failing which Pakistan had to face the risk of being placed on the black list along with other countries including Iran and North Korea.

Pakistan and the FATF grey list

For the first time, Pakistan was included in the grey list in 2012 and was seen on it until 2015.

In June 29, 2018, Pakistan was grey listed for the second time by the FATF.

Pakistan submitted its compliance report on the 27 point action plan.

The five year review by the APG concluded on August 23, 2019 and FATF said Pakistan failed to complete its action plan on the issue of terror financing. It was evident that Pakistan is on the verge of strong action as it could manage to pass only 6 of the 27 items.

On Thursday, October 18, 2019, the FATF will take up the grey listing of Pakistan.

What is Dark Grey List?

The rules of FATF state that there is an intermediary stage between the grey and black lists namely the dark grey list. According to the information got from the official source, being entered in the dark grey list will mean an issuance of a serious warning that will give the country the last chance to improve.

Dark grey was the term that FATF uses for referring to warnings up to the 3rd phase. Nowadays it is called as warning which is in the 4th phase.

What are the implications if Pakistan is placed on the Dark Grey List?

Finding its way to the Dark Grey List by FATF will mean some dire consequences for Pakistan. If this happens, Pakistan will find it extremely difficult to get any financial aid from the IMF, the European Union and the World Bank. This will mean a precarious condition for the country especially at a time when the country is facing a serious economic set back.

What is happening right now?

Countries including India, UK, US and France are pushing for a stricter action against Pakistan. While Pakistan is striving hard to get off the grey list, India is working through different channels to see that the blacklisting process of Pakistan is initiated. October 18 will be a crucial day for Pakistan. The support from China, Malaysia and Turkey will mean there are chances for Pakistan not to be blacklisted as only a minimum of three votes are needed to prevent black listing at the FATF. However, to get out of the grey list, the country will need the votes of at least 15 nations. As of now, Pakistan does not enjoy this luxury.