No official intimation of #FATF decision yet. We should not speculate till official statement is released.— Ahsan Iqbal (@betterpakistan) February 23, 2018
It followed reports that the Financial Action Task Force (FATF) had placed Pakistan back on its list of non-compliant countries, days after the country’s Foreign Minister Khawaja Muhammad Asif announced a victory against the US co-sponsored resolution.
Reuters on Friday, citing Indian media and an unnamed non-Indian diplomatic source from one of the FATF countries, reported that the anti-money laundering and terror-financing watchdog had decided Pakistan would be put back on the watch list.
“The decision was taken yesterday,” the diplomat told Reuters.
He added that the financial consequences would not kick in until June, which, in theory, could allow Pakistan wriggle room to solve terrorist-financing issues. “But the odds of that, particularly in an election year, seem slim,” he said.
The Foreign Office rejected Indian media reports of FATF including Pakistan on the “grey list,” Pakistan’s English daily The News reported.
Foreign Office spokesman Dr. Mohammed Faisal said at a press briefing: “So far, the outcome of the ICRG (International Country Risk Guide) /FATF meeting in Paris is awaited.”
“Pakistan has serious concerns over, and objections to, the introduction of this new ‘nomination’ procedure, which is unprecedented and in clear violation of established rules/practices of FATF,” he said. “Most of the concerns raised by the US side regarding deficiencies in our CFT (combating financing of terrorism) and AML (anti-money laundering) regime had already been addressed in 2015 when Pakistan got an exit from the “grey list.”
The resolution to put Pakistan on FATF’s high-risk and non-compliant list has been spearheaded by US with the support of Britain, France and Germany.
Earlier this week, Pakistan’s foreign minister said that there was “no consensus for nominating Pakistan” at the FATF plenary session, which began its six-day meeting on Sunday after members of the regulatory body failed to reach an agreement on placing the country on its grey list.
Officials at the Ministry of Finance and Ministry of Foreign Affairs declined to comment to Arab News until the conclusion of the Paris meeting.
A three-month reprieve was extended by FATF to Pakistan and its Asian Pacific Group subsidiary is scheduled to review “another report” for consideration.
Senior economist Dr. Syed Nazre Hyder described the potential impact if Pakistan was included on the watch list as “near lethal.”
The cost to banks’ customers would rise, investors in the international capital market would request a much higher rate of return from Pakistan and multilateral financing organizations would add risk premiums on any money borrowed, he said.
Financial experts fear that the International Monetary Fund may also reject any loan extension Pakistan might request as a bailout to curb its widening trade deficit, or offer a new deal with stricter guidelines dictated by the US and EU.
“Pakistan will need a loan to pay off its debt burden,” Hyder told Arab News. “If it’s included on the list, the country will face a serious challenge sourcing funds for repayment, leading to the possibility of default. This would cripple Pakistan economically.”