• The global terror financing watchdog FATF on Wednesday decided to keep Pakistan in the “Grey List” as it has failed to check flow of money to terror groups like the Lashkar-e-Taiba (LeT) and the Jaish-e-Mohammed (JeM) .
• The decision was taken at the Financial Action Task Force’s third and final plenary held virtually due to the COVID-19 pandemic. The plenary was held under the Chinese Presidency of Xiangmin Liu.
• The FATF plenary decided continuation of Pakistan in ‘Grey List’ till its next meeting to be held in October.
What is FATF?
• Founded in 1989 on the initiative of the G7, the Financial Action Task Force (FATF), also known by its French name, Groupe d’action financière (GAFI), is an intergovernmental organization to develop policies to combat money laundering.
• In 2001, its mandate was expanded to include terrorism financing.
• The objectives of FATF are to set standards and promote 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.
• FATF is a “policy-making body” that works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
• FATF monitors progress in implementing its Recommendations through “peer reviews” (“mutual evaluations”) of 39 member countries.
What are Black List and Grey List of the FATF?
• Only those countries are included in black list that FATF considers as uncooperative tax havens for terror funding. These countries are known as Non-Cooperative Countries or Territories (NCCTs). In other words; countries that are supporting terror funding and money laundering activities are placed in the Blacklist.
• The FATF blacklist or OECD blacklist has been issued by the Financial Action Task Force since 2000 and lists countries which it judges to be non-cooperative in the global fight against money laundering and terror funding.
• Those countries which are not considered as the safe heaven for supporting terror funding and money laundering; included in this list. The inclusion in this list is not as severe as blacklisted.
• Now Grey list is a warning given to the country that it might come in Black list (Just like a yellow card in a football match). If a country is unable to curb mushrooming of terror funding and money laundering; it is shifted from grey list to black list by the FATF.
Pakistan’s Grey list history:
• Pakistan was included in the grey list for the first time in 2012 and remained in it till 2015.
• On 29 June, 2018 FATF Grey listed Pakistan for the second time. The process began in February 2018 when FATF approved the nomination of Pakistan for monitoring under its International Cooperation Review Group (ICRG) commonly known as the ‘Grey list’.
• India, USA and UK want that Pakistan should be included in the black list of FATF while China and Turkey are opposing this move.
• Currently, Pakistan is in Grey list of FATF. Due to increasing pressure; Pakistan is striving to comply all the 27 FATF Targets.