Pakistan likely to avoid being placed on FATF’s blacklist

KARACHI: Pakistan is unlikely to be placed on the blacklist of the global financial watchdog as the country has made enough progress to meet international anti-money laundering and terror financing standards, a brokerage said on Monday.

“Since a comprehensive action plan has already been submitted, we believe that chances of Pakistan to be placed on the blacklist in the ongoing FATF (Financial Action Taskforce) meeting is least likely, contrary to the market expectations, as only countries that do not make sufficient progress or fail to provide an action plan are moved to the blacklist,” Topline Securities said in a flash note.

“We also downplay concerns of an adverse impact on Pakistan’s economy due to its inclusion in the blacklist in case Pakistan fails to satisfy FATF.”

A Pakistani delegation is currently on a visit to Paris to attend FATF meeting that started on June 24 (Sunday).

“The week’s meetings will conclude with the third and final plenary meeting on 27-29 June, where they will officially place Pakistan on the Improving Global Anti-money Laundering (AML)/Countering Financing of Terrorism (CFT) compliance’s list, also known as the grey list,” Topline Securities said. This list comprises of jurisdictions with strategic AML/CFT deficiencies for which they have developed an action plan with the FATF.

In February, FATF decided to place the country on the grey list from June. The country was previously part of high risk jurisdictions (blacklist) in 2008 and 2012, while it was under jurisdictions that were making sufficient progress (grey list) in 2010 and 2014. Pakistan was removed from the grey list in 2015.

Though FATF did not officially announce Pakistan’s placement on the grey list, the US and the UK jointly moved the FATF in February, nominating Pakistan for placement on the grey list and were subsequently joined by France and Germany. Later, Pakistan was asked to submit a comprehensive action plan to be reviewed in the ongoing FATF meeting for countering the financing of terrorism deficiencies.

Pakistan has made a lot of efforts to counter financing terrorism and preparing anti-money laundering laws and recently addressed issues raised by the FATF on the tax amnesty scheme.

On June 8, the National Security Committee reaffirmed its commitment to cooperate with the FATF, while Securities and Exchange Commission of Pakistan issued Anti-money Laundering and Countering Financing of Terrorism Regulations (2018) on Jun 20.

Topline Securities said though Pakistan’s inclusion in the blacklist may hurt its standing in the international landscape, it will not be as severe as recently been portrayed.

“This is because when Pakistan was part of the grey list/blacklist (2008-2015), it successfully approached multilateral bodies, floated international bonds and had international trades.”

Currently, FATF has officially designated 10 countries under high-risk jurisdictions (blacklist) and jurisdictions that are making sufficient progress (grey list).

There are eight countries under FATF’s grey list, namely Ethiopia, Iraq, Serbia, Sri Lanka, Syria, Tunisia, Vanuatu, Yemen and two countries under the blacklist, including Iran and North Korea.

The FATF and the Middle East and North Africa FATF are holding 6-day joint plenary meetings in Paris to protect the integrity of the global financial system and to contribute to safety and security. The meetings involve delegations from the 203 jurisdictions of the FATF Global Network, as well as the United Nations, International Monetary Fund, World Bank and other partners.

FATF identifies jurisdictions with strategic AML/CFT deficiencies in its two public documents: FATF Public Statement (call for action) and Improving Global AML/CFT Compliance and On-going Process that is issued three times a year. FATF does not use grey list/blacklist terminologies

Countries that are identified as having deficiencies in their financial system are placed on grey list (ongoing process), while countries that are not making sufficient progress in addressing the deficiencies or have not committed to an action plan are moved to blacklist and termed as high risk jurisdictions (public statement-call for action).