According to FATF, Pakistan has substantially completed its two action plans but a formal decision declaring this has been stalled till October. FATF wants to verify through an on-site visit if agreed reforms have been both implemented and sustained. FATF also needs to see if necessary political commitment remains in place for improvement in future. Pakistan will have to be extra vigilant over the next few months to ensure that the agreed reforms are implemented in letter and spirit.
While the country is still in FATF’s grey list a race has started between the PTI and the establishment to claim credit for the positive development. Former Interior Minister Sh Rashid has said credit for Pakistan’s exit from the grey list would go to former prime minister Imran Khan, the Pakistan Army and the Interior Ministry. Imran Khan appreciated the efforts of former federal minister Hammad Azhar and his team for enabling the country to exit the grey list. On the other hand DG ISPR says the Pakistan Army played a vital role along with the government and other national institutions to complete the FATF action plans, paving the way for removal from the global financial watchdog’s grey list. In fact it was a combined national effort that led to the result. The entire opposition joined hands with the government to make the laws required by te IMF while a whole lot of civil and military institutions worked hard to bring the country out of the grey list.
Being placed on te grey list brings extra scrutiny from regulators and financial institutions that can chill trade and investment as also increase transaction costs. Had Pakistan been put back on the grey list it would have heightened Pakistan’s risk profile and some financial institutions would be wary of transacting with Pakistani banks and institutions.
Pakistan had to bend itself backward to come out of the grey list. It needs to take extra precautions in order not to be downgraded again. FATF pressure has played a positive role also as it made Pakistan take measures against money laundering and terror financing in less than four years that the country might have taken in more than a decade if left to itself.
