BERLIN/ISLAMABAD: The Financial Action Task Force (FATF) on Friday expressed satisfaction with Pakistan’s performance but the anti-money laundering watchdog stopped short of removing it from its ‘grey list’.

In a delayed press conference about decisions taken in its plenary, the body’s president Dr Marcus Pleyer said that an FATF team would conduct an on-site visit of Pakistan at the earliest possible date. He said that the body acknowledged the “significant progress” the country has made in strengthening its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime.

Minister of State for Foreign Affairs Minister Hina Rabbani Khar, who is heading Pakistan delegation in Berlin, says the process for removal of Pakistan from the FATF ‘grey list’ will be completed by October after the visit from the technical inspection team.

“Since June 2018, when Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies. Pakistan’s continued political commitment to combating both terrorist financing and money laundering has led to significant progress,” the FATF said in a statement.

It added that the body would continue to monitor the Covid-19 situation in the country.

“In particular, Pakistan demonstrated that terror-financing investigations and prosecutions target senior leaders and commanders of UN designated terrorist groups and that there is a positive upwards trend in the number of ML investigations and prosecutions being pursued in Pakistan, in line with Pakistan’s risk profile. In addition, Pakistan also largely addressed its 2021 action plan ahead of the set times.

“At its June 2022 Plenary, the FATF made the initial determination that Pakistan has substantially completed its two action plans, covering 34 items, and warrants an on-site visit to verify that the implementation of Pakistan’s AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation and improvement in the future.

Foreign Office

“FATF has acknowledged the completion of Pakistan’s both Action Plans (2018 and 2021) and has authorized an onsite visit to Pakistan, as a final step to exit from the FATF’s grey list,” the FO said in a statement.

It said Pakistan was lauded for for completing its action plan, covering 34 items, including those for 2021 that were completed in record time.

Pakistan continued its relentless efforts towards successful completion of these Action Plans despite many challenges including the Covid-19 pandemic, the statement added.

“Pakistan has covered a lot of ground in the AML/CFT domain during implementation of FATF Action Plans. The engagement with FATF has led to the development of a strong AML/CFT framework in Pakistan and resulted in improving of our systems to cope with future challenges.”

Rumour mill in overdrive

Earlier, unsubstantiated reports doing the rounds on social media claimed that Pakistan had been removed from the FATF’s increased monitoring list. However, Business Recorder reported that the FATF had categorically stated that all announcements pertaining to the outcome of its plenary meeting would be made at the press conference.

“The outcomes of the four-day FATF Plenary will be published on Friday, June 17 after the close of the meeting. There will be a press briefing in Berlin on the outcomes of the FATF Plenary on Friday 17 June at 16:30 Berlin time (local time 7:30pm),” an official handout statement said.

The FATF delegates, which represent 206 members of the Global Network and observer organisations took part in the last plenary under the two-year German Presidency of Dr Marcus Pleyer from June 14 to 17.

Read more: Pakistan to likely exit from FATF grey list as watchdog’s meeting starts in Berlin today

However, sources told Aaj News that it would take seven to eight months for Pakistan to complete the process even if it secures a clean status as the watchdog’s team would visit the country and review the proposed requirements. Islamabad was asked to comply with 34 points in two stages.

The foreign ministry has stressed the need for avoiding speculation regarding the outcomes of the meeting. The government of Pakistan has arranged a media briefing at the Ministry of Foreign Affairs on Saturday morning on the issue, State Minister Hina Rabbani Khar said in a tweet. Information Minister Marriyum Aurangzeb reitarated the same.

Hina’s reaction came against the backdrop of Pakistan Tehreek-e-Insaf leader Shahbaz Gill tweet in which he claimed that the country has been taken off the FATF “grey list”. He gave credit for the apparent development to his party leaders.

Talking to Aaj News, anchorperson Shaukat Paracha was also optimistic about the outcome. He explained that every ministry had fulfilled its responsibility to comply with international demands.

“Chief of the Army Staff General Qamar Javed Bajwa had put together a team that put in a lot of effort,” he said, adding that the relations with foreign countries also play a vital role in such developments.

Background

Pakistan was placed on the FATF ‘grey list’ in June 2018 after the country failed to act against terror financing on its soil.

FATF delegates meet three times a year, in February, June, and October to review the compliance report. The decision to keep/remove a country on/from the “blacklist” or the “grey list” is made after the submission of the Asia/Pacific Group on Money Laundering, a subsidiary organisation of FATF.

In a February meeting, the watchdog said Pakistan had complied with 32 out of the total 34 points and asked the country to address the remaining deficiencies in its financial system. Sources said that the country lacked diplomacy and lobbying.

This time, Islamabad engaged many European countries to counter their opposition. They also linked German Foreign Minister Annalena Baerbock to Pakistan in a similar connection.

Grey and Black: The Lists

FATF has two lists.

Black List: Those countries that are known as Non-Cooperative Countries or Territories (NCCTs) are put in the blacklist. These countries support terror funding and money laundering activities. The FATF revises the black list regularly, adding or deleting entries.

Grey List: It includes countries that are considered safe haven for supporting terror funding and money laundering. This inclusion serves as a warning to the country that it may be moved to the blacklist.

Impact

The exit from the so-called grey list would have a big impact on the economy as the listing affects the banking sector, leading to reservations from leading investors. Estimates are that Pakistan has incurred billions of dollars of losses just because of its position on the grey list.

Pakistan incurred $38 billion worth of economic losses because of the FATF decision to keep the country on its grey list since 2008, said a research paper published by an independent think-tank, Tabadlab, in 2021.