February 4, 2023 2:59 pm

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Will The Thaw in US-Pak Relations Facilitate Pakistan’s Exit From FATF Grey List

Pakistan is currently going through an economic crisis and the inflation rate is at an all-time high. Being on the FATF grey list has made it face stringent financial sanctions and difficulties in availing of international loans.

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In what could be a major relief for cash-strapped Pakistan, the Financial Action Task Force(FATF) could today take a decision to bring Pakistan out of the grey-listed countries.

FATF is a Paris-based global watchdog on money laundering and terror financing. Its first two-day plenary meeting under the chairmanship of T.Raja Kumar, President of the Financial Action Task Force commenced on 20th October 2022.

 The delegates of the plenary represent 206 members of the Global Network and observer organizations, including the International Monetary Fund, the United Nations, the World Bank, INTERPOL, and the Egmont Group of Financial Intelligence Units, who are participating in the Working Group and Plenary meetings in Paris. 

The outcomes of the Plenary will be announced today (21st October 2022) in a press conference by the FATF president. The press conference is scheduled for 17:00 CEST(8:30 PM IST).

Earlier in September 2022, a 15- member delegation of FATF conducted an on-site evaluation in Pakistan to verify the country’s progress on a 34-point action plan which Pakistan committed to in June 2018 when it was placed on the grey list. Pakistan termed the visit successful and hoped that it would pave the way for its exit from the grey list.

Timeline of Pakistan in FATF grey list

Pakistan was placed for the first time on the FATF grey list on February 28, 2008, over charges of sponsoring terrorism. In June 2010, Pakistan exited from the list after it showed mild progress in curbing terror financing.

However, in February 2012 Pakistan after failing to counter the menace of terrorism and its financing of various terror elements, was again put back on the grey list. It was on February 26, 2015, that it came out of the Grey list.

Being a state sponsor of terrorism, Pakistan actively uses terrorism as its state policy and thus could not remain out of the scrutiny of FATF and was again put on the grey list for the third time on June 28, 2018.

Pakistan is the harbourer of global terror outfits and has terrorists from every major terror group present on its soil. It never deserves to come out of the FATF grey list.

The fact remains that the United States was involved in its global war on terror in Afghanistan from 2001-2021 and Pakistan was its so-called ally. The US needed Pakistan in the war against terror and hence was facilitated to come out with the FATF list of terror financing and money laundering everytime.

What it meant to be on the Grey list for Pakistan

Pakistan’s economy has been impacted heavily after it got placed on the FATF grey list. The creditors and investors hesitate to invest in the country. Global financial institutes and banks also restrict their business with a country that is placed on the FATF black/grey list countries.

A report published by the Qatari news daily Al Jazeera says that “ A Pakistani-based independent think-tank, Tabadlab, has estimated it has cost the country’s economy $38bn since it was put on the grey list in 2018.”

 Pakistan is currently going through an economic crisis and the inflation rate is at an all-time high. Being on the FATF grey list has made it face stringent financial sanctions and difficulties in availing of international loans which would have helped in overcoming the financial crisis.

Will Pakistan get out of the grey list

Pakistan hopes to come out of the list in the ongoing plenary meeting in Paris. Pakistan’s news daily, the Dawn has reported that FATF might remove Pakistan from the grey list after the successful on-site visit by the delegation of the Financial Action Task Force last month.

As per a report published in News 18, the western nations particularly the United States are pushing to take Pakistan off the grey list of FATF after the successful on-site inspection earlier in September.

With the sudden improvement in ties between Pakistan and the Biden administration, it is expected that the United States is willing to take Pakistan off the list.

The US decision to reignite the F-16 programme, as well as the successful drone strike that killed Al-Qaeda chief Ayman al-Zawahiri in Kabul which many believe was facilitated by Pakistan, is indicative enough that US-Pak relations are back again.

The visit of Pak Army Chief Qamar Javed Bajwa to the pentagon where he was given the “honour cordon” shows that the US is ready to cooperate with Pakistan so as to safeguard its interest in South Asia, particularly in Afghanistan.

Hence, looking at the policy shift of the United States regarding Pakistan and the changing geopolitical scenario in the subcontinent, Pakistan’s coming out of the FATF grey list will not be a surprise.

Shubham Joshi
Shubham Joshi
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