Pakistan Placed On Financial Action Task Force’s Grey List


Members of the Financial Action Task Force (FATF), an anti-money-laundering watchdog based in France, placed Pakistan on the “grey list” of nations with inadequate terrorist financing or money laundering controls. The group was persuaded by Washington to put Islamabad back on the list since its removal in 2015. Members placed the nation on the list for failing to convince them that it was taking adequate measures to prevent money laundering and terror financing.

The United States (US) claims Pakistan is not taking adequate measures to restrict money-raising capabilities of Islamic charities controlled by Hafiz Saeed, who is designated as a terrorist by the North American country. Saeed is also blamed for the 2008 Mumbai attacks in India. While the foreign minister ruled out any Pakistani intentions to retaliate against Washington’s move to place Islamabad on FATF’s listing, he added that his country would continue to reform and improve its capabilities to improve its standing in Britain, Germany and France, who co-sponsored the U.S. motion in Paris.

In the days leading up to the FATF meeting, Pakistan sought to prevent being placed on the grey list by banning parts of Saeed’s Jamaat-ud-Dawa (JuD) and Falah-e-Insaniat Foundation (FIF) charities, which the United States believe is used to fund terrorist fronts for militant group Lashkar-e-Taiba (LeT). Pakistan was able to prevent the first U.S.-led motion from being successful by relying on an objection from members like Turkey, China and the Gulf Cooperation Countries (GCC) countries. However, the motion passed the second time as the GCC and China withdrew their objections following pressure from the United States. According to Pakistani newspaper The Nation, “the decision is a diplomatic blow to Islamabad’s relationship with its ‘all-weather’ friend China, which has invested billions in the country’s infrastructure, and Saudi Arabia, to which Pakistan sent some 1,000 troops earlier this month.’” The move also worsened already strained relations between Pakistan and the United States, who continue to differ on their strategy for combating militants in Afghanistan.

The stance makes it harder for Pakistan to raise money from multilateral institutions and attract foreign businesses to the Asian nation. It could also lead to a rating downgrade which is likely to impact the Pakistani economy. Islamabad now has three months to bring about reforms to be officially added to the list in June and prevent the nation from becoming internationally isolated. “We will start meeting on the issue of FATF after March 1 to see what can we do on this and what strategy we can devise,” finance minister Rana Afzal Khan told AFP, adding that Pakistan has not yet received a list of actions it needs to implement. Islamabad hopes to be removed from the greylist in the next 12 months.

Nishtha Sharma

Nishtha Sharma is an undergraduate student of International and Global Studies at the University of Sydney majoring in Government and International Relations and American Studies. Her research interests include North America and Asia. As an International and Global Studies student, the OWP has provided her with a platform to research and produce articles and reports about issues of global importance. She is currently working as a correspondent in the Australian Division of the OWP.
Nishtha Sharma

About Nishtha Sharma

Nishtha Sharma is an undergraduate student of International and Global Studies at the University of Sydney majoring in Government and International Relations and American Studies. Her research interests include North America and Asia. As an International and Global Studies student, the OWP has provided her with a platform to research and produce articles and reports about issues of global importance. She is currently working as a correspondent in the Australian Division of the OWP.