With the concluding session of the plenary meeting of the FATF taking place on Friday—which includes Pakistan’s review on the agenda—it appears that Pakistan will remain on the grey list at least until June 2022, and maybe even till January next year. This is because Islamabad is still working on meeting some targets of the 2021 action plan on anti-money laundering and combating terror financing (AML/CFT).
Pakistan has been on the grey list since June 2018 and this matter has been dragged on for far too long. The fact that Pakistan will remain on the grey list for several more months does not imply that Islamabad is not fulfilling its obligations. It is important to note that in October 2021, the FATF acknowledged Pakistan’s significant progress on a 27-point action plan. The remaining four items relating to money laundering deficiencies are part of the most recent 2021 action plan of the Asia Pacific Group (APG), therefore it makes sense as to why the completion of these targets is taking some time.
Nevertheless, Pakistan should work on meeting the remaining requirements at the earliest so that this chapter can be put behind us. It is hard to quantify what the cost is for Islamabad for remaining on the grey list, but it is undeniable that the FATF listing impacts our image internationally and has been weighing us down in terms of foreign exchange injections. This is all the more important considering our pivot to geo-economics and how certain adversaries seek to exploit the FATF listing for their own political gains.
Also, the completion of APG’s action plan is important because it is a structural benchmark of the IMF plan. The recent “no questions asked” tax amnesty announced for the construction is concerning because of its implications for money laundering safeguards. Reports reveal that the government has now said that it will ensure that the AML/CFT guidelines are met, and also that the State Bank of Pakistan will conduct a thematic inspection of banks in relation to the amnesty scheme. It was expected that the nature of the scheme would raise questions with these international bodies, and we must now work to allay their concerns at the earliest and turn the page on this chapter.
Pakistan has been on the grey list since June 2018 and this matter has been dragged on for far too long. The fact that Pakistan will remain on the grey list for several more months does not imply that Islamabad is not fulfilling its obligations. It is important to note that in October 2021, the FATF acknowledged Pakistan’s significant progress on a 27-point action plan. The remaining four items relating to money laundering deficiencies are part of the most recent 2021 action plan of the Asia Pacific Group (APG), therefore it makes sense as to why the completion of these targets is taking some time.
Nevertheless, Pakistan should work on meeting the remaining requirements at the earliest so that this chapter can be put behind us. It is hard to quantify what the cost is for Islamabad for remaining on the grey list, but it is undeniable that the FATF listing impacts our image internationally and has been weighing us down in terms of foreign exchange injections. This is all the more important considering our pivot to geo-economics and how certain adversaries seek to exploit the FATF listing for their own political gains.
Also, the completion of APG’s action plan is important because it is a structural benchmark of the IMF plan. The recent “no questions asked” tax amnesty announced for the construction is concerning because of its implications for money laundering safeguards. Reports reveal that the government has now said that it will ensure that the AML/CFT guidelines are met, and also that the State Bank of Pakistan will conduct a thematic inspection of banks in relation to the amnesty scheme. It was expected that the nature of the scheme would raise questions with these international bodies, and we must now work to allay their concerns at the earliest and turn the page on this chapter.
