Due to its failure to curb funneling of funds to terrorist groups that are responsible for carrying out attacks in India, the ‘Asia-Pacific Group’ of FATF (Financial Action Task Force) has put Pakistan in the ‘Enhanced Expedited Follow Up List’ (also referred to as ‘blacklist’ by some). The decision was taken today (August 23) in the FATF APG meeting held in Canberra, Australia. Currently, Pakistan is under the FATF ‘Grey List’, placed during June 2018 meeting.
What is FATF?
Financial Action Task Force is an intergovernmental entity, charged with the job to combat money laundering and terror financing. It was established in 1989 with the initial aim to combat money laundering only. In 2001, its mandate expanded to include ‘terror financing’. Headquartered in Paris, France, it has a membership of 39 nations. India is a member of FATF.
Why was it placed in ‘blacklist’?
The FATF’s Asia-Pacific Group observed that Pakistan failed to meet the standards. According to APG, the country was non-compliant on 32 of 40 compliance parameters related to terror financing and money laundering. It also observed that Pakistan had failed to stop funding to the terrorist groups like Lashkar-e-Taiba and Jaish-e-Mohammed. The latter is known to be the force behind the recent 2019 Pulwama attack in India.
What next?
The present FATF’s ‘Grey List’ status of Pakstan is to continue till the next plenary of FATF which is to be held at Paris in October 2019. But it is highly likely that the country will be placed under FATF ‘Black List’.
What’ll happen if it’s placed under ‘Black List’?
Those countries placed under the FATF Blacklist are known as “Non-co-operative Countries or Territories” (NCCTs). As the name suggests they are barred from carrying out normal affairs with the rest of the world. If placed under the Blacklist, Pakistan may surely be downgraded by important international financial institutions like World Bank (WB), International Monetary Fund (IMF), the EU, etc. and financial rating agencies like Moody’s, S&P. This will further exacerbate problems of the country which is already under severe economic strain.
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