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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.

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

FATF expanded as Financial Action task Force was established during the G7 summit that was conducted in Paris in the year 1989. The stakeholders in this organization include the heads of the G7 countries, the heads of eight other countries and the President of the European Commission. FATF Objectives The principal objective of FATF is to evolve the standards and norms pertaining to the regulatory measures to combat money laundering, terrorist financing and a range of other related threats that pose a risk tot eh health of the international financial system. FATF works with the nation states to encourage some legislative changes and reforms in the sectors discussed above. Also, FATF provides policy recommendations that comply with the international standards in the line of combating money laundering, proliferation of the weapons of mass destruction, and terrorism funding. Since 1990, FATF has revised its recommendations four times. FATF Member Nations The official website of FATF says the organization has 39 members. The members of the FATF represent major financial centers around the world. What is FATF Blacklist? FATF Blacklist refers to the FATF list of "Non-Cooperative Countries or Territories" (NCCTs). The OECD Blacklist has been published from the year 2000 and this list consists of the names of the countries that are non-cooperative with regard to the global measures to combat money laundering and terrorism financing. The FATF updates this blacklist regularly by adding or deleting the entries made. The case of Pakistan and FATF Blacklist The FATF review entered Pakistan in the grey list in June 2018. The organization gave 27 action plans for the country to be fulfilled before September 2019 for being considered to get the country out of the grey list. The recent reviews have discovered that the country could only fulfill 7 conditions out of the 27 which will mean a bad performance by Pakistan in the lines of addressing the AML/CFT deficiencies. What can be expected during the FATF meeting in Paris on October 18, 2019? The FATF meeting in Paris on October 18, 2019 will decide what has to happen with the grey listing of Pakistan. The three possibilities in front of the country would be to get out of the grey list, to continue in the grey list or in the worst case, enter the black list. Only if three countries support the motion, Pakistan has chances of not entering the blacklist. In order to get out of the grey list, Pakistan will need the support of not less than 15 countries, which might not come through this time. So, the greatest chances are there for the country to be continued in the grey list. Implications of grey / black listing for Pakistan At a time when Pakistan is already facing a severe economic crisis, grey listing of the country will take a further toll on the country. It will make borrowing of money from other countries a difficult thing for Pakistan. The only choice for Pakistan could be to request for the International Monetary Fund (IMF) for help. If this has to come through, Pakistan will be forced to share the complete details about its foreign funding including China-Pakistan Economic Corridor (CPEC), the Chinese funded project. If this happens, it will create a serious setback for both China and Pakistan as this project has been kept as a secrecy till date for some ulterior reasons. Summary of FATF Statements from 2012 FATF February 2012 statement identified 23 countries that had not implemented the FATF standards. The list said the countries that committed and addressing the AML/CFT deficiencies included Algeria, Angola, Antigua and Barbuda, Argentina, Bangladesh, Brunei Darussalam, Cambodia, Kyrgyzstan, Mongolia, Morocco, Namibia, Nepal, Nicaragua, Sudan, Tajikistan, Trinidad and Tobago, Turkmenistan, Venezuela, and Zimbabwe. The countries that had committed, but did not make sufficient progress included Ecuador, Philippines, Vietnam, and Yemen. The 2012 FATF list also listed 17 countries as high-risk and non-cooperative including Iran, North Korea, Bolivia, Cuba, Ethiopia, Ghana, Indonesia, Kenya, Myanmar, Nigeria, Pakistan, Sao Tome and Principe, Sri Lanka, Syria, Tanzania, Thailand, and Turkey. FATF June 2013 statement listed 14 countries that were said to have strategic deficiencies coming as risk to the international financial system including Iran, North Korea, Ecuador, Ethiopia, Indonesia, Kenya, Myanmar, Pakistan, São Tomé and Príncipe, Syria, Tanzania, Turkey, Vietnam, and Yemen. The list also mentioned that the above said countries had not made sufficient progress with regard to addressing the deficiencies and had not committed to an action plan. FATF October 2013 statement mentioned the names of 13 countries that had strategic AML/CFT deficiencies and had not made the desired progress in rectifying the deficiencies or committing to an action plan. The names of the countries included Iran, North Korea, Algeria, Ecuador, Ethiopia, Indonesia, Kenya, Myanmar, Tanzania, Turkey, and Yemen. FATF February 2014 statement listed 11 countries that posed a risk to the international financial system including Iran, North Korea, Algeria, Ecuador, Ethiopia, Indonesia, Myanmar, Syria, Turkey, and Yemen. FATF June 2014 statement listed 6 countries that did not make sufficient progress in line with rectifying the AML/CFT deficiencies including Iran, North Korea, Algeria, Ecuador, Indonesia, and Myanmar. FATF February 2015 statement listed 6 counties that had made a significant progress with regard to improving their AML/CFT regime and said these countries were no longer subject to the FATF monitoring process. The countries included Cambodia, Kuwait, Namibia, Nicaragua, Pakistan, and Zimbabwe. The FATF October 2015 statement listed three counties including Iran, North Korea and Myanmar as non-cooperative jurisdictions and high risk countries with strategic deficiencies. February 2016 FATF statement dropped Panama from the grey list and called the two countries namely Iran and North Korea to apply counter-measures. Through the FATF February 2017 statement, the FATF published the following concern regarding North Korea saying, “The FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its anti‑money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. The FATF urges the DPRK to immediately and meaningfully address its AML/CFT deficiencies. Further, FATF has serious concerns with the threat posed by DPRK’s illicit activities related to the proliferation of weapons of mass destruction (WMDs) and its financing.” In November 2017, Uganda was removed from the FATF review process since the country had improved its AML/CFT regime. On the same grounds, Bosnia and Herzegovina were removed from the list in February 2018 and Iraq and Vanuatu were removed from the list in June 2018. The June 2018 Public Statement by FATF expressed its disappointment over Iran’s failure to implement its action plan to rectify the AML/CFT deficiencies. In the same Public statement, FATF grey listed Pakistan for the second time. See Also: <a data-type="tilCustomLink">Pakistan's fate hangs in balance as FATF begins meeting in Paris</a>

Explained: FATF Origin, Objectives, functions and why Pakistan is in trouble

<ul><li>Chinese President Xi Jinping is in India for the second informal meeting with PM Modi. </li><li>The first informal meeting held at Wuhan in China did result in slight normalisation of relations--- which soured after the 2017 Doklam standoff. </li><li>This meeting is expected to thaw the frosty relations between the two neighbours over several issues, including Kashmir, UNSC permanent membership and Chinese company Huawei. </li></ul> Chinese Premier Xi Jinping landed in Chennai <a href="https://timesofindia.indiatimes.com/india/pm-modi-arrives-in-chennai-to-attend-2nd-indo-china-informal-summit/articleshow/71535568.cms">a little after 2 pm today </a>to participate in the second informal meeting with Prime Minister Narendra Modi at Mamallapuram in Tamil Nadu. The <a href="https://www.ndtv.com/india-news/xi-jinping-india-china-informal-summit-border-terror-on-agenda-at-pm-modi-xi-meet-today-2115002">first informal meeting held at Wuhan in China did result in slight normalisation </a>of relations — which soured after the 2017 Doklam standoff. This meeting is expected to thaw the frosty relations between the two neighbours over several issues, including Kashmir. China’s stance on Kashmir The Indian foreign ministry <a href="https://www.scmp.com/news/china/diplomacy/article/3032384/steer-clear-india-pakistan-dispute-over-kashmir-new-delhi">refused to discuss the Kashmir issue</a> on October 10. This was a day after <a href="https://www.news18.com/news/world/pakistan-pm-imran-khan-arrives-in-china-to-meet-president-xi-jinping-2337721.html">Xi met Pakistan Prime Minister Imran Khan</a> in Beijing on Wednesday. After that, <a href="https://www.ndtv.com/india-news/kashmir-in-focus-as-imran-khan-xi-jinping-meet-beijing-cites-un-charter-2114351">a joint statement was released </a>by China and <keyword id="3001" type="LOCATION" weightage="20" keywordseo="Pakistan">Pakistan</keyword><a href="https://www.indiatoday.in/world/story/pakistan-imran-khan-china-ties-trade-cpec-jcc-kashmir-hong-kong-1608115-2019-10-10"> stating</a> that Jammu and Kashmir should be "properly and peacefully <a href="https://www.ndtv.com/india-news/xi-jinping-india-china-informal-summit-border-terror-on-agenda-at-pm-modi-xi-meet-today-2115002">resolved</a> based on the UN Charter, relevant UN Security Council resolutions and bilateral agreements." In response, India asked them to off the issue <a href="https://www.ndtv.com/india-news/indias-counter-to-xi-jinpings-kashmir-remark-its-an-internal-matter-2114288">saying</a>, "India's position has been consistent and clear that Jammu and Kashmir is an integral part of India. China is well aware of our position. It is not for other countries to comment on the internal affairs of India." China also criticised India’s <a href="https://www.ndtv.com/india-news/xi-jinping-india-china-informal-summit-border-terror-on-agenda-at-pm-modi-xi-meet-today-2115002">decision to scrap</a> special status to Jammu and Kashmir and bifurcate it into two union territories, at the UN General Assembly last month in New York. India’s decision on allowing Chinese company Huawei in its 5G rollout India <a href="https://economictimes.indiatimes.com/industry/telecom/telecom-news/5g-spectrum-auction-by-year-end-or-early-2020-ravi-shankar-prasad/articleshow/71117477.cms">plans to auction 5G airwaves</a> this year but it remains undecided on<a href="https://www.ndtv.com/india-news/hopeful-india-will-make-independent-decision-on-5g-huawei-2114887"> whether or not to allow Chinese company Huawei </a>to compete. As China and the US are in the throes of a trade war, the latter has been arm twisting countries into<a href="https://www.vox.com/technology/2018/12/11/18134440/huawei-executive-order-entity-list-china-trump"> banning Huawei</a> from 5G roll-outs because of allegations of spying. And, there is a huge divide — <a href="https://www.livemint.com/companies/news/huawei-says-banning-company-will-delay-india-s-5g-rollout-by-2-3-years-1567500859756.html">Australia and Japan have barred</a> Huawei while Russia, Turkey, and Saudi Arabia refused to. Both these countries seek an ally in India, as it holds a big bargaining chip. It is the <a href="https://www.livemint.com/companies/news/huawei-says-banning-company-will-delay-india-s-5g-rollout-by-2-3-years-1567500859756.html">world’s second largest mobile services market. </a> For both US and China, India’s decision on the matter is key, and it has not spilled the beans on this topic. China’s stance on India’s inclusion in the UN Security Council Even after warm affirmations from the UK, France and Russia over India’s candidature for a permanent seat in the UN Security Council,<a href="https://www.thehindu.com/news/national/indias-campaign-for-permanent-seat-at-unsc-slowing-down/article29161642.ece"> China’s stance remains lukewarm. </a>India<a href="https://www.thehindu.com/news/national/unsc-non-permanent-seat-indias-candidature-endorsed-by-55-countries-including-pakistan/article28142769.ece"> has been elected as a non-permanent member in the UNSC</a> a record seven times, and has been seeking a permanent seat, along with Germany, Japan and Brazil. It also does not help that China <a href="https://economictimes.indiatimes.com/news/defence/after-chinas-masood-azhar-block-unsc-vote-under-consideration/articleshow/68418293.cms?from=mdr">blocked</a> the proposal to designate Jaish-e-Mohammad (JeM) chief Masood Azhar a global terrorist for almost 10 years back, before finally lifting the hold earlier this year. Azhar was <a href="https://www.indiatoday.in/india/story/masood-azhar-hafiz-saeed-dawood-declared-terrorists-under-new-uapa-law-1595463-2019-09-04">involved in planning several terrorist attacks</a> against India, including the 2019 Pulwama attacks. China presiding over FATF and protecting Pakistan China was one of the countries which was<a href="https://economictimes.indiatimes.com/news/defence/china-turkey-malaysia-bail-out-pakistan-at-fatf-meet/articleshow/69899220.cms?from=mdr"> protecting Pakistan</a> from being blacklisted by the Financial Action Task Force (FATF). Malaysia and Turkey were the other countries which had come to its aid. China <a href="https://www.fatf-gafi.org/about/fatfpresidency/">presides over the international anti-money laundering body</a> which assesses a country’s efforts to combat terrorist funding. Pakistan <a href="https://www.indiatoday.in/india/story/masood-azhar-hafiz-saeed-dawood-declared-terrorists-under-new-uapa-law-1595463-2019-09-04">was finally placed on the FATF</a> blacklist in August this year. China seeing the Quad as a threat The Quadrilateral Security Dialogue (or simply, the Quad), comprising India, Japan, the US and Australia is a strategic partnership to counter the spread of China’s influence in the Indo-Pacific region. Beijing was <a href="https://www.news18.com/news/india/five-reasons-why-china-is-worried-about-the-quad-coalition-1575397.html">expectedly unhappy and has been protesting </a>within diplomatic circles, especially after they carried out joint military exercises. China also <a href="https://www.scmp.com/news/china/diplomacy/article/2167457/japan-and-vietnam-join-hands-over-disputed-south-china-sea">has a long-standing feud with Japan</a> over islands in the South China Sea, besides the border issue in India’s northeast. Despite Australia’s reservations on upsetting China, their growing proximity with New Delhi signals that China should <a href="https://www.livemint.com/Opinion/vzKYXmhiLn1HVL6nDf4r4K/India-and-the-Quad-countries.html">beware of this small but steadily brewing partnership.</a> If even one of these many long pending issues are sorted,<a href="https://www.businessinsider.in/international/news/list-of-monuments-chinese-president-xi-jingping-is-going-to-visit-in-india/articleshow/71521441.cms"> the meeting between the two leaders could be as historic as the city they are meeting at.</a> See also: 
 <div type="Article" hostid="261" msid="71498284" title="Indian medical students will now have to learn Mandarin to study in China" mstype="2" mssubtype="0"></div>

Xi Jinping arrives in India — here's a look at 5 contentious issues between India and China

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

BI India Bureau

Explained: FATF Origin, Objectives, functions and why Pakistan is in trouble

BI India Bureau

Xi Jinping arrives in India — here's a look at 5 contentious issues between India and China

BI India Bureau

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