Pakistan has been placed on the ‘grey list’ by FATF on June 27. This means that the country’s financial system will be designated as posing a risk to the international financial system because of ‘strategic deficiencies’ in its ability to prevent terror financing and money laundering. After being placed on the ‘grey list’, Pakistan will be directly scrutinised by FATF until it is satisfied by the measures taken to curb terror financing and money laundering. “Pakistan will work to implement its action plan to accomplish these objectives,” reads FATF statement.
FATF has issued an action plan to curb terror financing and money laundering. In the first step, Pakistan has to demonstrate that terrorist financing risks are properly identified, assessed, and that supervision is applied on a risk-sensitive basis. The country has to demonstrate that remedial actions and sanctions are applied in cases of AML/CFT (Anti-Money Laundering/ Combating the Financing of Terrorism) regime violations, and that these actions have an effect on AML/CFT compliance by financial institutions.
It needs to demonstrate that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS).
