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Pakistan to remain on FATF grey list

Topics Covered: Important International institutions, agencies and fora, their structure, mandate.

Pakistan to remain on FATF grey list

Context:

Pakistan is likely to remain on the grey list of the Financial Action Task Force (FATF) for failing to comply with the global terrorist financing watchdog’s deadline to prosecute and penalise terrorist financing in the country.

What’s the issue?

At an FATF meeting in February, Islamabad had been told that ‘all deadlines’ had expired and if they didn’t prosecute and penalise terrorist financing by June, the watchdog would take action.

At the Paris plenary too, the FATF had expressed serious concerns over Pakistan’s failure to complete its 27-point action plan in line with the agreed timelines – which ended in September 2019.

Implications:

  • With Pakistan’s continuation in the ‘Grey List’, it will be difficult for the country to get financial aid from the IMF, the World Bank, the ADB and the European Union.
  • This will further enhance problems for the nation which is in a precarious economic situation.
  • Also, there is every possibility that the global body may put the country in the ‘Black List’.

About FATF:

It is an inter- governmental body established in 1989 on the initiative of the G7.

Its Secretariat is located at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris.

Member Countries: There are 39 member of FATF, representing most financial centres around the world. This includes 2 regional organisations- GCC and EC. The FATF Plenary is the decision making body of the FATF. It meets three times per year.

What is blacklist and grey list?

Black List: Countries known as Non-Cooperative Countries or Territories (NCCTs) are put in the blacklist. These countries support terror funding and money laundering activities. The FATF revises the blacklist regularly, adding or deleting entries.

Grey List: Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.

Insta Links:

Prelims Link:

  1. G7 vs G8 vs G20.
  2. Black vs Grey list.
  3. Are FATF’s decisions binding on member countries?
  4. Who heads the FATF?
  5. Where is its secretariat?

Mains Link:

What is the mandate and objectives of Financial Action Task Force? Discuss its importance for India – Pakistan relations.

Sources: the Hindu.