fatf blacklist

The objectives of the 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. 

The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. The FATF is, therefore, a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas. FATF blacklist the countries or puts them in greylist until there defined recommendation and measures are implemented.

The FATF has developed a series of Recommendations that are recognized as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction. 

They form the basis for a coordinated response to these threats to the integrity of the financial system and help ensure a level playing field. 

First issued in 1990, the FATF Recommendations were revised in 1996, 2001, 2003 and most recently in 2012 to ensure that they remain up to date and relevant, and they are intended to be of universal application.

The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally. 

In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.

The FATF’s decision-making body, the FATF Plenary, meets three times per year. 


What is FBR Amnesty scheme 2019 & Who Can Avail this?


Members of FATF

The FATF currently comprises 37 member jurisdictions including India, Turkey, China, Saudi Arabia, and Israel. Two regional organizations, representing most major financial centers in all parts of the globe.

FATF Report about Pakistan June-2019

The FATF expresses concern that not only did Pakistan fail to complete its action plan items with January deadlines, it also failed to complete its action plan items due May 2019. The FATF strongly urges Pakistan to swiftly complete its action plan by October 2019 when the last set of action plan items are set to expire. Otherwise, the FATF will decide the next step at that time for insufficient progress.

What is FATF BlackList

The FATF blacklist was the common shorthand description for the Financial Action Task Force list of “Non-Cooperative Countries or Territories” (NCCTs).

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 terrorist financing, calling them “Non-Cooperative Countries or Territories” (NCCTs).

Although non-appearance on the blacklist was perceived to be a mark of approbation for offshore financial centers (or “tax havens”) who are sufficiently well regulated to meet all of the FATF’s criteria, in practice the list included countries that did not operate as offshore financial centers. The FATF updates the blacklist regularly, adding or deleting entries.


What’re IMF Bailouts? Pakistan’s IMF Bailout history…


Pakistan VS FATF

Pakistan’s placement on FATF’s grey list is far more political than financial in nature.

It is being seen as one of the several ways the US is attempting to pressure Pakistan to “do more” on issues related to terrorism.

The long-winded, jargon-filled recommendations and methodology used by FATF leave plenty of flexibility for the team of assessors to exercise their “informed judgment”.

That is, based on the same information, assessors could reach more than one judgment, including the one sought by the politically powerful.

Role of the USA in FATF

US is also a major financier of FATF and the current president of FATF is an Assistant Secretary from the US Department of the Treasury who heads the Office of Terrorist Financing and Financial Crimes.

If the US can have Pakistan placed on the grey list, it may also make it difficult for Pakistan to exit the list.

Bottom line is that FATF’s greylisting of Pakistan should not be looked at in isolation but placed in the larger picture of US-Pakistan relations that have had many ups and downs.

What to Do Now?

This time China, Turkey, and Malaysia came to our rescue, thanks to our intense and last-minute diplomatic efforts. Support from a minimum of three countries, out of 37, is needed to keep on dodging the blacklisting threat. And with Saudi Arabia being granted full membership, we have one more member to work on.

But we must realize that diplomacy alone may keep us out of the blacklist but cannot get us out of the greylist, for which we would need a significantly larger number of votes. And this wouldn’t happen without stepping beyond politics and diplomacy of the issue.

The only viable course of action for Pakistan is, therefore, to wholeheartedly implement the agreed action plan with FATF. This would only be possible with the full support of and involvement by the top political, judicial and military brass of the country.

While we are making commissions to inquire into public debt and forming task forces for everything under the sun, maybe its time to divert some serious attention to this very important issue as well.

Perhaps the newly-formed high-powered National Development Council, including Army Chief and provincial chief ministers as its members, should take up this issue as a test case and put full might of the state behind it. Or else, the threat of blacklisting will keep on haunting us every few months, shooing away investors and keeping the uncertainty looming.