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Saturday, February 4, 2023

Will Pakistan remain or leave the FATF grey-list?

FATF President is sent to announce the result of the deliberations between Pakistan and FATF soon. Being on the grey-list has cost the country a staggering $38 Billion!

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The Financial Action Task Force (FATF) is expected to announce later today whether Pakistan has done enough to exit the grey-list as it wraps up its four-day plenary meeting.

FATF president will give a press briefing to announce the decision at 4:30 PM

Last week, the Foreign Office spokesperson had indicated that Pakistan had made substantive progress on the remaining six points, adding that this was acknowledged by the FATF as well.

The FATF had placed Pakistan on the grey list in June 2018 and placed 27 conditions to comply within one year, till September 2019. However, Pakistan has been given three extensions of three months each, every time to comply with the 27-point action plan.

Read More: Is Pakistan likely to be removed from FATF grey list?

At the last assessment, Pakistan was still not complying with all the 27 points. The major one which raised maximum contention was the fact that Pakistan was not actively taking any action against any of the banned outfits, registered as non-state-actors or terrorists with UNSC. Pakistan was also found lacking conviction against prosecuting banned individuals and tackling smuggling of narcotics and precious stones.

However, recently the authorities had taken further steps including the prosecution of Lashkar-e-Taiba chief Hafiz Saeed and his associates in terror financing cases.

According to an independent think-tank being placed in the FATF grey list has cost Pakistan a high $38 billion since 2008 in terms of GDP. “Exports and inward foreign direct investment are also partially responsible for this decline in GDP, with associated cumulative losses of USD 4.5 billion and USD 3.6 billion respectively”, Mr. Nafay Safdar wrote. These losses are also the form of capital inflows into the country, like export sanctions and consumer expenditure.

Pakistan has blamed the US-India nexus for its placement on the grey list, although the diplomats in Islamabad believe that the FATF put Islamabad on the non-compliant list more because of technical reasons than the political ones.

A diplomat from an important country said that Pakistan’s progress on three action points was still below the desired results, which may result in its extension on the grey list for at least a few more months.

Read More: Pakistan makes significant progress on all 27 benchmarks under FATF Action Plan

The decision will of course impact the work done by the incumbent government to attract investments and bring multinational companies into Pakistan, and the export sector will be impacted in the form of sanctions.