NEW DELHI: Pakistan has escaped the financial gallows, yet again. Financial Action Task Force (FATF), the global watchdog for terror financing and money laundering, has given it another four months to show it remains serious about tackling terror funding. Until then, Pakistan will continue to be on the ‘grey list’ of FATF instead of being pushed down into the ‘black list’.
On the concluding day of its plenary, the watchdog said Pakistan has addressed only five of the 27 items on which it was required to take action. On the remaining 22 items, FATF noted “varying levels of progress made”.
Calling upon Pakistan to complete its full Action Plan by February 2020, FATF said Pakistan needs to show “significant and sustainable progress”. Else, the global watchdog warned that it might need to call upon its members to advise their financial institutions to give special attention to business relations and transactions with Pakistan.
This, in essence, means failure to comply could relegate Pakistan to the ‘black list’ and it could face the prospect of a financial squeeze by other countries as well as IMF and the World Bank. Both the World Bank and the IMF have observer status with the FATF as do several other international organisations.
Any financial sanctions could prove devastating for Pakistan’s economy that’s already in the doldrums. It could also impact the $6 billion bailout package announced by the IMF last month to help the country “restore inclusive and sustainable growth”.
Having accused Pakistan time and again of being a state sponsor of terrorism, India is learnt to have pushed for Pakistan’s black-listing.
The decision to not blacklist Pakistan was said to have a broad consensus at the plenary. However, in old friend China, which is the current chair of the FATF, Turkey and Malaysia, Pakistan has allies especially if push came to shove.
But given the tardy progress being made by Pakistan in complying with the FATF Action Plan, it’s unlikely that it will be able to get off the ‘grey list’ any time soon. “All deadlines in the Action Plan have now expired. While noting recent improvements, the FATF again expresses serious concerns with the overall lack of progress by Pakistan to address its TF (terror financing) risks, including a sufficient understanding of Pakistan’s transnational TF risks and more broadly Pakistan’s failure to complete its Action Plan in line with the agreed timelines,” FATF noted.