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What is FATF and how does it add countries to the grey and black list? What about Pakistan?


 What is FATF and how does it add countries to the grey and black list? What about Pakistan?

what is FATF

The Financial Action Task Force is a decision-making institution. It deals with the issues of money laundering and virtual currencies. This body aimed to give protection to the security of the financial system at the international level. For this, it's one role is the war against terror financing. Greylisting is not as harmful to a country as much blacklist. FATF can influence economic activities by scrutinizing and keeping eye on their international level transections. So it can say that the blacklist is the "call for action" and the grey list is "monitoring by FATF". So it will decrease trade opportunities and has the disadvantage of a closed economy.

The war against terror financing

FATF is against the support of terrorists by money. For this reason in 2019, it blacklisted two countries Iran and North Korea. Twenty-three countries are on the grey list. Pakistan is one of them.

Black and Grey listed countries

 Black listed countries mean those countries which are sure to funding for terror and money laundering, while grey list means under observation countries. These countries may be entered on the black list if do not change their policies about funding terrorists and money laundering. The Grey listed countries are Yemen, Albania, United Arab Emirates, Barbados, Burkina Faso, Nicaragua, Uganda, Cayman Island, Turkey, Gibraltar, Syria, Haiti, South Sudan, Jamaica, Senegal, Jordan, Philippines, Panama, Mali, Nicaragua, and Pakistan

Actions against grey-listed and black-listed countries 

Grey listed has many disadvantages.  FATF can freeze the support funding, and stop their weapon access, and tourism ban. IMF and other monetary institutions can restrict and getting loans become impossible for grey-listed countries. The economical boycott is forced. So international trade may be facing many restrictions 

The list of grey and black are living documents .on the bases of AML and CFT regulations, a country can be added or withdrawn from it according to the standard of FATF.

What about Pakistan

What is FATF and how does it add countries to the grey and black list? What about Pakistan?
Pakistan has been on the grey list since 2018. In the past, Pakistan was also on the grey list from 2012-20. Pakistan has faced a loss of $38bn in 2018. Pakistan has sanctioned support for the terrorist as Masood Azhar of Jaish -e-Mohammad, Hafiz Saeed the founder of Lashkar-e-tayba, Taliban, and Zakiur Rehman Lakhvi. FATF has decided to keep Pakistan on the grey list until the full measures to take. Pakistan removed from the grey list in the month of october 2022 after the visit of Pakistan to see the progress. The indicators show that Pakistan was closer to the white list of FATF.

IMF and FATF

The international monetary Fund demanded to complete the remaining items or fulfilling the conditions of FATF for further work with Pakistan. So Pakistan has made a commitment for applying the AML/CFT to impose a tax on construction sectors by financial departments and institutions till June 2022.

Pakistan aid and FATF

It is clear that Pakistan had to face hurdles with greylisting for getting financial aid from IMF, ADB, World Bank, and the European Union.

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