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Pakistan is out of FATF ‘grey list’ on terror funding

  • Published
    22nd Oct, 2022
Context

Pakistan won a major reprieve, as the FATF, an international watchdog on terror financing and money laundering agreed to remove Pakistan’s name from the 'grey list'.

More on news

  • Financial Action Task Force has agreed to remove Pakistan’s name from the list of countries under “increased monitoring”.
  • FATF has “welcomed Pakistan’s significant progress” in its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) mechanisms.
  • India has protested Pakistan’s lack of action against cross-border terror groups responsible for attacks on India.
  • India's other neighbor, Myanmar has been moved from the grey list to the “black list” due to actions by the military leadership after the 2021 coup and will face even more severe financial sanctions and an inability to procure IMF, World Bank, and ADB loans.

Financial Action Task Force (FATF):

  • It was established in July 1989 by a Group of Seven (G-7) Summit in Paris, initially to examine and develop measures to combat money laundering.
  • In October 2001, the FATF expanded its mandate to incorporate efforts to combat terrorist financing, in addition to money laundering.
  • Since its inception, the FATF has operated under a fixed life span, requiring a specific decision by its Ministers to continue.
  • The current mandate of the FATF (2012-2020) was adopted at a Ministerial meeting in April 2012.
  • Its secretariat is housed administratively at the OECD.
  • FATF was not formed as a formal international Organisation. Rather, the FATF is a task force composed of member governments who agree to fund the FATF temporarily with specific goals and projects.

How many countries are there in the FATF?

  • The FATF, which reportedly comprises 36 countries and two regional organizations (European Commission and Gulf Cooperation Council), works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.

What are the Black List and Grey List? Those are two types of lists that FATF maintains. A blacklist is given to the countries that FATF considers uncooperative tax havens. These countries are known as Non-Cooperative Countries or Territories (NCCTs). A Grey list is a warning given to the country that it might come on the Black list. But even when a country comes under a grey list it faces many problems like problems in getting loans Economic sanctions Reduction in trade.
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