Replied by Aakriti Vinayak
The Financial Action Task Force (FATF), set up in 1989 following a G-7 resolution, provides the international standards for anti-money laundering and combatting terrorist financing (AML/CFT). An Inter-governmental organisation with 38 members and two observers, the FATF is a policy making body which sets “standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
Pakistan, on whose soil several terrorist groups operate freely, and whose agencies are known to have created and supported many of these groups, is an obvious weak point in the International fight combat terrorist financing. Pakistan has been under scrutiny of this terror watchdog and has a long history of FATF grey listing- from 2008 to 2010 and then from 2012 to 2015 for making money laundering and terror funding as its foreign policy tool to foment violence and civil disturbance in its neighborood. In June 2018 Pakistan was again placed on the ‘Grey List’ by the FATF and till date it continues to be under the scrutiny of the terror watchdog.
As of February 2021 Pakistan continues to remain on the grey list as there are "serious deficiencies" in checking terror financing and the country lacks an effective system to deal with it. FATF has mentioned that Pakistan should continue to work on implementing the three remaining items in its action plan to address its strategically important deficiencies, namely by: (1) demonstrating that TF investigations and prosecutions target persons and entities acting on behalf or at the direction of the designated persons or entities; (2) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions; and (3) demonstrating effective implementation of targeted financial sanctions against all 1267 and 1373 designated terrorists, specifically those acting for or on their behalf.
A potential blacklisting will lead to Pakistan’s status further demoted, it can be expected that the country will face considerable difficulties and challenges in order to access financial assistance from global economic institutions such as the International Monetary Fund (IMF).
Important Links-
https://www.fatfgafi.org/media/fatf/documents/brochuresannualreports/FATF30-(1989-2019).pdf
https://www.orfonline.org/expert-speak/pakistan-evade-blacklisting-remain-greylisted-61458/
http://www.fatf-gafi.org/countries/#Pakistan
https://www.vifindia.org/2019/february/18/fatf-and-pakistan