Pakistan has been blacklisted by the Asia-Pacific Group (APG) – one of the regional affiliates of the Financial Action Task Force (FATF), anti-money laundering watchdog. APG is currently meeting at Canberra in Australia reviewing progress made by Pakistan to upgrade its financial system so that it can’t be used for terror financing and money laundering. APG has reportedly found deficiencies in Pakistan’s efforts.
What is FATF?
The Financial Action Task Force (FATF) is an inter-governmental body established in 1989. The objective of the FATF is to set standards and promote the global financial system that helps in combating money laundering, terrorist financing and other related threats to the international financial system. The FATF ensures compliance from countries world over.
A country failing in meeting the standards set by FATF is put under the grey list and continued violation of standards can take country into the blacklist. Once, the country is blacklisted, its financial status is downgraded.
FATF Plenary in Session Image Source: FATF
Status of Pakistan
Due to the policy of giving proxy support to terrorists, Pakistan has always been under the lens of many international institutions including the FATF. Islamabad has already been put on the grey list by the FATF in 2018. It was for the second time that Pakistan was put on the grey list.
Now, APG, a regional group of FATF, blacklisting Pakistan may further complicate things as FATF is due to take up the final review of Pakistan’s case in its next plenary session in October 2019.
What happens if a country is blacklisted?
After APG’s action, Islamabad is on the verge of getting blacklisted by FATF. If it happens, it may have many adverse consequences on its already stressed economy. It may attract economic sanctions from international institutions like World Bank and International Monetary Fund. Moreover, access to loans and funding from developed countries like USA will not be easy. Thus, blacklisting by FATF may cause chaos and ruin the economy of Pakistan.