ISLAMABAD: The Financial Action Task Force (FATF) decided on Thursday to keep Pakistan on its grey list after being satisfied with Islamabad’s 26-point proposed action plan to counter-terrorism financing and money laundering.
Pakistan could have found itself on the FATF’s blacklist if the global financial watchdog rejected its proposed plan.
“We were told in February that we will be placed on the grey list from June,” Foreign Office spokesman Dr. Mohammad Faisal said on Thursday.
“We will have to ensure the implementation of the action plan shared with the FATF while we are on the grey list.” Pakistan can be removed from the list “if adequate measures are taken,” he added.
The FATF will review Islamabad’s performance on the action plan in its next meeting in October, he said.
The FATF is an inter-governmental body that monitors its members’ progress in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally.
Caretaker Finance Minister Dr. Shamshad Akhtar and her team presented Pakistan’s action plan during the watchdog’s plenary meeting in Paris on Wednesday.
Islamabad has taken enough measures since February to combat terrorism financing and money laundering, she said.
The US and its allies — including Britain, France and Germany — moved a motion against Pakistan in February seeking its placement on the grey list for not taking enough action to eliminate terrorism financing and money laundering.
That month, Pakistan was put up for monitoring under the FATF’s International Cooperation Review Group, known as the grey list.
The Foreign Office confirmed in February after the Paris meeting that Pakistan would be officially placed on the grey list in June if it failed to take measures to curb terror financing.
Economists say the move is bound to hit Pakistan’s economy as the listing is enough to deter foreign investment and foreign aid, and will raise the cost of doing business in the country.
The international financial market runs on rumors, and Pakistan’s placement on the grey list is bound to impact the exchange rate and foreign reserves, said senior economist Dr. Athar Ahmed.
“We need to plug loopholes in our banking and financial system to satisfy the international community that Pakistan is doing enough to combat terrorism financing and money laundering,” he told Arab News.
Overseas Pakistanis send remittances of around $18 billion annually through banking channels, while some $10 billion annually are remitted through illegal channels such as Hawala and Hundi, he said.
“The money remitted by overseas Pakistanis through the illegal channels doesn’t come under the ambit of money laundering. They just do it to save banking charges and some government taxes,” he added.
“Pakistan isn’t in a position to finance terrorism. We’re a victim of terrorism, and the international community should support us instead of slapping sanctions.”
Sakib Sherani, a former economic adviser to the government, told Arab News: “Pakistan received $2 billion in foreign investment in the last 12 months. This may go down in the coming months due to its placement on the grey list.”
If Islamabad fully implements the proposed action plan, “this will help Pakistan improve its image among the international community, and be off the grey list in a year and a half,” he said.