Pakistan On FATF Grey List
Source : Indian Express
GS II : International Relation

Content for Pakistan On FATF Grey List Article

1. About the news
2. What is FATF Grey List ?
3. What is its Impact ?

Read this article in-line with : Pakistan Setting Rules For FATF Norms

Why in News ?

Financial Action Task Force (FATF) refused to take Pakistan out of the Grey List yet again.

Key Facts

• A brief Background
  • Pakistan was put on the grey list by Financial Action Task Force (FATF) for money laundering and terror financing in June 2018 and the country has been struggling to come out of it.

    

• What is the Reason ?
  • Pakistan had failed to take appropriate action against UN-designated terrorists such as 26/11 accused Hafiz Saeed and JeM chief Masood Azhar.
• Measures Taken by Pakistan
  • Pakistan set to introduce new rules relating to anti-money laundering cases.
  • They change the prosecution process to meet its remaining tough conditions made by FAFT
  • Two sets of rules including the AML (Forfeited Properties Management) Rules 2021 and the AML (Referral) Rules 2021 approved by the federal Cabinet.
• Current Scenario/Comment by FAFT body       
  • Global anti-money laundering and terror financing body acknowledged some progress made by Pakistan
  • The country should continue to work to address its strategically-important deficiencies.
  • Pakistan has now completed 26 of the 27 action items given to it in 2018.
  • The FATF has asked Pakistan to take action against UN designated terrorists.
  • Pakistan government has failed to check risk of money laundering, leading to corruption and terror financing.

What is Financial Action Task Force (FATF) and Grey List ?

• Global money laundering and terrorist financing watchdog is an inter-governmental body sets international standards.
• The ultimate aim is to prevent these illegal activities and the harm they cause to society.
• FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
• There are 39 members of FATF. Indian is a member. 
• What is FAFT Grey List ?
  • It is a list of countries that should be put under increased monitoring that is decided by FAFT.
  • These countries lags policy that can curb money laundering, terror funding, financial proliferation and those issues mentioned by FAFT.
  • Those countries put under Grey List should address the issues as early as possible.
  • Countries continues under this list are Albania, Barbados, Botswana, Cambodia, Jamaica, Haiti, Malta, Mauritius, Myanmar (Burma), Nicaragua, Pakistan, Panama, Philippines, South Sudan, Syria, Uganda, Yemen, Zimbabwe.
  • Note that these countries will be updated from time to time. And all these countries continues as their financial system are not standard according to FAFT.
• How does this grey List Impact a country ?
  • As a result Pakistan loss its economic value at globally.
  • GDP of the country may impact and external aide from global bodies may get affected. 
  • Even further not implementing the country may get blacklisted.
  • Also lacks trade opportunities and various global ratings may down graded. 

What does it mean for Indian ?

• Pakistan never took action against terrorist leaders such as JeM founder Masood Azhar and Sajid Mir a mastermind of LeT’s 2008 Mumbai attacks that India demanding.
• India’s long stand demand for Pakistan to act against terrorism.

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