FATF’s grey list includes countries that are not doing enough to fight money laundering and terrorist financing.
Pakistan was on this list previously for three years between 2012 and 2015. The task force recognized Pakistan’s efforts and removed it from the grey list in 2015. Pakistan was placed in the grey-list again, in last year with effect from June 2018 to June 2019.
Other countries, apart from Pakistan, included in the list are; Ethiopia, Iraq, Yemen, Serbia, Syria, Sri Lanka, Trinidad and Tobago, Tunisia, and Vanuatu.
Pakistan’s inclusion has raised a lot of concerns in the country. Reason behind this is that FATF evaluates country’s financial system to determine if they are to be included on the blacklist.
What Does it Mean to Be in the Grey List?
Inclusion in this list is not good for any country especially a country like Pakistan which is already a financially broken.
1) Pakistan’s inclusion in the terror financing list portrays a negative image to the world.
1) Pakistan’s inclusion in the terror financing list portrays a negative image to the world.
2) It also conveys the impression that no effective measures aren’t being taken to halt money laundering or financing Jihadi groups that have been banned for indulging in terrorist activities.
3) Countries placed on these lists see a decrease in foreign investment and foreign companies hesitate to invest considering the potential ties to terrorist activities. It is bad for the reputation of other companies as well. No company wants to be doing business with a country that has possible ties with terrorist funding activities or lacks a process that prevents such activities.
4) It become difficult for Pakistan to get foreign loans from IMF, World Bank or Asian Development Bank etc as well. It also prove hard to raise debts from international markets. Foreign banks may also decide to pull out, hitting the financial sector of Pakistan.
Implications for Pakistan
It is believed that Pakistan was included in the list because Jamaat-ud-Dawa and Falah-i-Insaniyat, Jaish-e-Mohammed and many other Jihadi groups, most of which are designated as terrorists organizations by United Nations, but Pakistan allowed them to work freely in the country.
If Pakistan fails to satisfy FATF with their devised strategy, then Pakistan will be placed on the blacklist. Blacklisted countries are those that are unwilling to fight money laundering and terrorist financing.
