The FATF and Pakistan’s position on its ‘grey list’

• Pakistan is hoping for some reprieve as the international watchdog Financial Action Task Force (FATF) begins meetings in Berlin ahead of its plenary session on June 14-17.

Significance of Meeting:

• would discuss the progress, referring to entities on the grey list including Pakistan and 22 other countries.
• There is significant momentum amongst the US and its five eyes intelligence alliance of UK, Canada, Australia and New Zealand, as well as some European countries to begin the process of removing Pakistan from the grey list.
• This would mean accepting that Pakistan has completed two separate task lists of 27 tasks and 7 tasks, on action against terror financing and money laundering respectively, and proposing an in-country site visit by FATF delegations to confirm the findings.
• If that process goes smoothly, the sources said that a final call on removing Pakistan from the grey list would be taken at the next FATF plenary October 16-21 this year.

What is the FATF?

• established at the G7 Summit of 1989 in Paris
• international watchdog for financial crimes such as money laundering and terror financing.
• In the aftermath of the 9/11 terror attack on the U.S., FATF also added terror financing as a main focus area.
• later broadened to include restricting the funding of weapons of mass destruction.
• currently has 39 members.
• Meetings- its plenary, meets thrice a year.
• sets standards or recommendations for countries for targeted goals.
• conducts Mutual Evaluations (ME) of countries to check their performance on standards prescribed by it.
  • reviews carried out by FATF and FATF-Style Regional Bodies (FSRBs).

What are FATF’s ‘Grey’ and ‘black’ lists?

• words ‘grey’ and ‘black’ list do not exist in the official FATF lexicon,
• they designate countries that need to work on complying with FATF directives and those who are non-compliant, respectively

Prelims Takeaway:

• FATF
• FATF’s ‘Grey’ and ‘black’ lists