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FATF warns Pakistan of blacklisting if terror funding not controlled by Feb 20

The FATF has asked Pakistan to take stern action against fund flows to terrorists to be out of Grey List.

Updated: Oct 19, 2019, 09.34 AM IST
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FATF retains Pakistan in Grey List; warns of action
The FATF noted that Pakistan addressed only five out of the 27 tasks given to it in controlling funding to terror groups.
NEW DELHI: A global watchdog for terror financing has told Pakistan to swiftly complete the full action plan given to it for checking fund flows to terrorist groups by February or face blacklisting, which would impact its already fragile economy.

There was consensus on issuing Pakistan a stern warning and retaining it in the 'grey list' based on its poor performance on the 27-point action plan, Financial Action Task Force (FATF) said on Friday as it ended its plenary meet in Paris.

Interestingly current FATF President (from China) Xiangmin Liu said, “Pak needs to do more & faster. Pak's failure to fulfill FATF global standards,issue we take very seriously.If by February 2020, Pakistan doesn't make significant progress, it will be put in the 'Black List.”

By making its warning to Pakistan public, FATF has given notice to global financial institutions that they need to ready their systems for the eventuality in February 2020.

The Paris-based inter-governmental body set up to combat money laundering and terrorist financing noted that Pakistan addressed only five out of the 27 tasks given to it in controlling funding to terror groups like the Lashkar-e-Taiba and Jaish-e-Mohammad, responsible for a series of attacks in India.

Hence the unanimous decision to express serious concern with overall lack of progress in addressing its transnational terror financing risks.

“Chances of Pakistan exiting the grey list in the next few years are now reduced to nil, and the possibility of a formal black listing in February 2020 is now highly probable,” a diplomatic source said.

“While Pakistan has made some progress on some parameters the Feb 2020 deadline is critical and Pakistan will be blacklisted if it fails. French worked closely with USA and other European partners to achieve strong FATF statement in Paris that warned Islamabad,” a French diplomatic source told ET. France as a close counter-terror partner for India has been pulling its weight to fight cross-border terror.

Another official who requested not to be named said if Pakistan fails to make significant and sustainable progress across the full range of its action plan by the time of FATF’s next plenary in February 2020, the watchdog will take action.

Such action could include calling upon global financial institutions to give special attention to business relations and transactions with Pakistan.

Currently, Iran and North Korea are on the FATF black list.

Pakistan was placed on the grey list by the Paris-based watchdog in June last year and was given a plan of action to complete it by October 2019, or face the risk of being blacklisted.

Pakistan’s allies Turkey and Malaysia, tacitly backed by current FATF chair China, provided three necessary votes needed by Pakistan to avoid blacklisting.

At the weeklong FATF meeting in Paris, Pakistan’s economic affairs minister Hammad Azhar claimed positive performance of his country on 20 of the 27 parameters to check terror financing.

Pakistan’s presence in the grey list makes it difficult for the country to get financial aid from the International Monetary Fund, the World Bank and the European Union, adversely impacting its economy.

In August, Asia/Pacific Group on Money Laundering (APG), a regional affiliate of FATF, had expressed concern over Pakistan’s performance owing to technical flaws. It had placed Pakistan in the enhanced expedited follow-up list (blacklist) for its failure to meet standards.

Pakistan scored poorly in the FATF-APG report, which was based on 10 parameters for ‘effectiveness and technical compliance ratings’ and 40 parameters for ‘technical compliance ratings’.

Of the ten parameters of effectiveness, Pakistan was found ‘low’ in nine areas and ‘moderate’ in one. Of the ‘technical compliance’ parameters, the country was found compliant in only one, partially compliant in 26, largely compliant in nine and non-compliant in four.

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