FATF MAY BLACKLIST PAKISTAN
03, Apr 2019
Prelims level : International Mains level : GS - II (Important aspects of governance, transparency and accountability, e- governance- applications, IR)
Why in News:
- Pakistan could be blacklisted by the FATF due to lobbying by India is estimated that the country could suffer a loss of $10 billion annually if it remains in the watch dog’s grey list.
- On June 2018, Paris based FATF had placed Pakistan on the ‘Grey list’ of countries whose domestic laws are considered weak to tackle the challenges of money laundering and terrorism financing.
- The Financial Action Task Force was set up in 1989 by the western G7 countries, with headquarters in Paris.
- FATF has 37 members that include all 5 permanent members of the Security Council, and other countries with economic influence. Two regional organisations, the Gulf Cooperation Council (GCC) and the European Commission (EC) are also its members.
- Saudi Arabia and Israel are “observer countries” (partial membership).
- India became a full member in 2010.
- FATF acts as an ‘international watchdog’ on issues of money-laundering and financing of terrorism. It works on a peer reviewing model.
- It is empowered to curtail financing of UN-designated terrorist groups. It can publicly sensor countries that are not abiding by its norms.
- Such censors would make it difficult for the concerned countries to source financial flows internationally and thereby constrain them economically.
What is the issue with Pakistan?
- Pakistan is particularly vulnerable to pressures from
- This is because multiple internationally designated terrorist groups operate from its soil. Notable among them are the Afghan Taliban, Haqqani Network, Lashkar-e-Taiba and Jaish -e-Mohammed. Pakistan argues that it is doing its best to prevent terrorism emanating from its But it does not recognize India focused JeM and LeT as terrorists.
Lists in FATF:
- There are 2 types of list in FATF
- Black list
- Grey list
- Countries which are not supporting terror funding and money laundering activities are listed in the Black list.
Those countries which are considered as the safe haven for supporting terror funding and money laundering; included in this list.
When a country comes in the Grey list, it faces many problems like;
- Economic sanctions from international institutions (IMF, World Bank, ADB etc.) and countries (This map shows the countries included in the Grey list)
- Problem in getting loans from international institutions (IMF, World Bank, ADB ) and countries Overall Reduction in its international trade International boycott
- BITS: Pakistan was included in the grey list for the first time in 2012 and remained in it till 2015. On 29 June, 2018 FATF Grey listed Pakistan for the second time.