The global financial watchdog Financial Action Task Force announced in its hybrid plenary meeting on Friday that Pakistan will remain yet again on its terrorism financing ‘grey list’ for the fifth consecutive year. With two unmet targets out of the 34 recommendations, the watchdog asked Islamabad to resolve the deficiencies in its financial system as soon as possible.
The United Arab Emirates has also joined the watchdog’s increased monitoring list, commonly known as the ‘grey list’, with inadequate controls over terrorism financing.
Pakistan was placed on the grey list in 2018 and has since retained the position for five consecutive years. In addition to the watchdog’s rigorous scrutiny, countries placed in the grey list risk reputational damage, rating adjustments, obtaining global finance, higher transaction costs and reduced foreign investment. Since Pakistan’s placement in the grey list, foreign firms have been averse from investing in the country.
“Pakistan should continue to work to address the one remaining item in its 2021 action plan by demonstrating a positive and sustained trend of pursuing complex [money laundering] investigations and prosecutions,” FATF said.
Pakistani officials have said the country aims to meet the FATF standards by 2023 and therefore exit the watchdog’s grey list.
Pakistan has continuously alleged that the FATF has been ‘politicized’ and India is using the organization to keep Pakistan on the list. India, which was taken in as the 34th member of FATF in 2010, has denied these charges and so has the global financial watchdog.
The United Arab Emirates has also joined the club of the countries placed in the FATF grey list. The Paris-based watchdog said that UAE will work with the FATF to implement an action plan to strengthen the effectiveness of its anti-money laundering and counter-terrorism financing regime.
The UAE government concurred, saying that it had a “strong commitment” to working with the FATF to resolve the issues.
“Robust actions and ongoing measures taken by the UAE government and private sector are in place to secure the stability and integrity of the country’s financial system,” the UAE said in a statement.