Current Affairs: Questions & Answers (Complete)

Q.What is (Financial Action Task Forec) FATF? Why did Pakistan get into Grey list? What are its implications and recommend a roadmap to get rid of it?

  • INTRODUCTION

The international watchdog against money laundering and financing of terrorism, the Financial Action Task Force (FATF), has put Pakistan on a list of “jurisdictions with strategic deficiencies”, also regarded as the grey list. FATF’s reasoning is Pakistan’s “structural deficiencies” in anti-money laundering (AML) and combating financing of terrorism (CFT). The other countries at the list, in alphabetical order, are Ethiopia, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen. This is not the first time Pakistan has found herself sanctioned to FATF’s list; the country was there in 2008 and from 2012 to 2015. However, now Pakistan has 15 months to implement an action plan to exit from the grey list.

  • WHAT THE FATF IS ABOUT!

It is an intergovernmental organization that was formed in 1989 on the recommendation by G-7 countries to crack down money laundering. In the due course of time, in 2001, the agenda of terror financing to be restrained was included. Currently, it has 37 countries members, having English and French official languages. Though its headquarters are in Paris. Its current President is Marshal Billingsela. It is however affiliated with Asia/Pacific Group on Money Laundering (APG), Caribbean Finance Action (CFATF) etc.

 

  • WHY DID PAKISTAN GET INTO GREY LIST?

There are countless causes which have led the country into grey list. The worth mentioning are as under.

 

  1. Structural deficiencies” in anti-money laundering (AML).

One of them is “Structural deficiencies” in anti-money laundering (AML). That’s why causes like Money laundering of Ayan Ali, Panama Gate etc and terror financing are observed in Pakistan.

 

  1. Unconstrained Terror Financing

According to the FAFT’s monitoring, Pakistan seems to be failed in overcoming the issues of terror financing. The banned organizations, mafias and terrorist groups etc to get funds from the anti-state elements. Those funds are used in the devastation of the world. So, FAFT puts the country in grey list and has given a time frame up to 15 months to crack down on these things, otherwise it is possibility that Pakistan can be placed in the Black list if it is unable to deal with these problems pragmatically.

 

  1. Unconstrained Terror Financing

Moreover, it is worth mentioning that the nexus between India and the USA also compelled the monitoring teams to put the country into the grey list. The most recent blow to this relationship came when America, under the Trump administration, managed to get a second round of vote to put Pakistan on the FATF’s grey list. It is astonishing to note that China and Saudi Arabia did not help out Pakistan apart part form Turkey, Saudi Arabia and China were looking at side line and did not favour Pakistan utterly, says by the critics. That’s why it is well said that in the international affairs no permanent friends or enemies

 

  • GREY LIST IMPLICATIONS IN PAKISTAN
    1. Economic crisis and global isolation

Due to the placement of Pakistan in grey list, the countries which are carrying trade and commerce with Pakistan, will no longer be to get interested. This will create an economic crisis the country. The impact on Pakistan’s economy could be relatively wide, touching imports, exports, remittances and access to international lending.

  1. Tarnishing the image of Pakistan

Being accounted with the grey list, Pakistan’s image will be spoiled. The credibility, integrity, honour and stability all are very important for a country like Pakistan which is also considered as developing one.  

 

  1. Decreasing in Foreign Direct Investment

On account of tarnishing the image of Pakistan, the foreigners will not invest in the country. They will thus find out other heaves to uphold their businesses. Decreasing in the foreign direct investment will create colossal economic problems.

  1. Devaluation of Currency and derailing of democracy

The inflation will occur. The job crisis will likely further increase and the devaluation of money can put the cold water on the nascent government’s democratic rule culture.

  1. Blacklisting like that of North Korea and Iran

One of the biggest implications is that Pakistan can be placed on the grey list which will not only adversely affect the economy but also will render the country into great socio-economic and political crisis for long. North Korea and Iran were counted into black list, though these countries survive at their own. However, placing Pakistan on the list of black is perhaps nearly impossible as the new government under energetic ministries and portfolios have kicked off the works to set free the country from grey list.