FATF – A tool of political coercion against Pakistan?

The FATF plenary meeting in June 2021 concluded that Pakistan remains under "increased monitoring."

The FATF is a global money laundering and terrorist financing watchdog, which helps authorities go after the money of perpetrators dealing in illegal drugs, human trafficking, and other offenses besides working to stop funding for weapons of mass destruction. It has 39 members, including India, whereas Indonesia has observer status.

Pakistan’s FATF History

Pakistan was on the FATF grey list from 2012 to 2015, when it completed an IMF program and raised funds from international bond markets.

In 2018, the country was placed on the FATF list of “Jurisdictions under Increased Monitoring” ‘grey-list citing ‘structural deficiencies that failed to target or terrorism financing effectively and money laundering.

Recent Developments (Pakistan Specific)

In collaboration with the International Cooperation Review Group (ICRG), FATF issued a 27-Point Action Plan in June 2018, urging Pakistan to implement it.

On Asia Pacific Group’s Mutual Evaluation Report (MER) 2019, Pakistan was declared compliant or largely compliant on 31 recommendations out of 40 to combat money laundering and terror financing. On the 23rd of October 2020, in its complete review, FATF acknowledged Pakistan’s progress with largely compliant on 21 of the 27 items of the Action Plan.

So far, 26 out of 27 action items have been completed. The remaining item is terror financing investigations, and prosecutions target senior leaders and commanders of UN-designated terrorist groups.

The Asia Pacific Group (APG) on money laundering and terror financing improved Pakistan’s rating on 21 of the 40 technical recommendations of the FATF but retained it on enhanced requirements.

The FATF plenary meeting in June 2021 concluded that Pakistan remains under “increased monitoring.”

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