Pakistan remains in FATF's Grey List

June 25, 2021 (MLN): Pakistan remained in the grey list of the Financial Action Task Force (FATF) despite the fact that Pakistan had fulfilled the anti-money laundering watchdog's maximum technical requirements.

The Paris-based global watchdog for curbing terror financing and money laundering has announced this decision today at the conclusion of its five-day virtual plenary session wherein, it reviewed Pakistan’s progress.

Pakistan has made substantial progress, However, one action item out of 27 action items needs to be addressed, President FATF Dr. Marcus Pleyer said.

This is the third extension given to Pakistan as 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.

To recall, in its last plenary, on Feb 25, FATF President Dr Marcus Pleyer had said Pakistan remained under increased monitoring, adding that “while the country has made significant progress, there remained some serious deficiencies in mechanisms to plug terrorism financing”.

In today's session, FATF has encouraged Pakistan to continue to make progress to address as soon as possible the one remaining item.

The FATF recognizes Pakistan’s progress and efforts to address these CFT action plan items. It noted that since February 2021, Pakistan has made progress to complete two of the three remaining action items on demonstrating that effective, proportionate and dissuasive sanctions are imposed for TF convictions and that Pakistan’s targeted financial sanctions regime was being used effectively to targeted terrorist assets.

"Substantial progress has been made but we expect Pakistan's government to address its strategically important  AML/CFT  deficiencies, as money laundering is high in Pakistan,"  Pleyer said.

"Deficiencies must be achieved. FATF's policies are same for every country;" he added.

Pakistan has made progress to address a number of the recommended actions in the  MER  and provided further high-level commitment in June 2021 to address these strategic deficiencies pursuant to a new action plan that primarily focuses on combating money laundering.

Apart from Pakistan, the FATF appreciated Japan as its measures to combat money laundering and terrorist financing are delivering results, however, the country needs to work on some areas particularly confiscation of crimes.

The FATF congratulated Ghana as it has been removed from the grey list. It welcomed Ghana’s significant progress in improving its AML/CFT regime. While Malta and Panama remained on the grey list.

The Plenary concluded that South Africa has a solid legal framework for combating money laundering and terrorist financing but significant shortcomings remain. In particular, the country needs to pursue money laundering and terrorist financing in line with its risk profile, including proactively seeking international cooperation, detecting and seizing illicit cash flows, and improving the availability of beneficial ownership information.

However, the country needs to prioritize efforts in certain areas, including the supervision of and preventive measures by financial institutions and designated non-financial businesses and professions, the prevention of misuse of legal persons and arrangements, and investigating and prosecuting money laundering and terrorist financing.

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