More trouble for Shehbaz Sharif as global terror funding watchdog FATF issues stern warning to Pakistan, says, ‘Exits on grey list not bulletproof…’

For years, Pakistan has been in the spotlight for terrorism financing, and yet again, its practices have been highlighted. This time, it was the international body, the Financial Action Task Force (FATF), which issued a stern warning. At the Paris meeting on Friday, FATF indicated that coming off the grey list in October 2022 does not give Pakistan a license to finance terrorism.

Who is monitoring Pakistan’s financial and anti-terror measures? Why is FATF issuing a stern warning to Pakistan?

Financial Action Task Force (FATF) Chair Elisa de Anda Madrazo emphasized that Pakistan cannot consider itself inherently safe from terrorist financing or money laundering after being removed from the grey list. During a press conference in France, FATF president Elisa de Anda Madrazo stated, “Any country that is on the grey list but also exists on the grey list is not bulletproof for actions of criminals, either money launderers or terrorists. So we do invite all jurisdictions, including those who have been delisted, to continue their good work to prevent and deter crimes.”

When did Pakistan last come off the FATF grey list?

Notably, in October 2022, Shehbaz Sharif-led Pakistan was removed from the FATF ‘greylist’ and has been under follow-up to ensure it is implementing anti-terror financing measures. Furthermore, Pakistan is not a member of the FATF, so the Asia Pacific Group (APG) has been conducting the follow-up. The FATF president stated that the list contains various countries and jurisdictions that have been placed under increased monitoring due to significant strategic deficiencies in countering terror financing and money laundering.

Which terrorist groups are allegedly active in Pakistan?

According to recent international reports, terrorist groups such as Jaish‑e‑Mohammed (JeM), located in Pakistan, have resumed soliciting funds. Reports indicate that they are raising funds on digital payment platforms and electronic wallets to fund terror training camps. These reports came to the attention of FATF, which warned Pakistan that it should act urgently to avert being returned once again to the grey list.

India(BHARAT)’s National Risk Assessment 2022 particularly identifies Pakistan as a high-risk source of terrorist financing. Previously, the ‘Comprehensive Update on Terrorist Financing Risks’ document discusses in detail terrorist financing types and emerging risks, particularly the increasing support of state-sponsored terrorism.

Pakistan was added to the FATF’s grey list in 2018 due to allegations of inaction on financial backing to terror groups and its inability to counter money laundering. After nearly four years of international pressure, it was removed from the grey list in 2022. However, FATF’s latest severe warning suggests that the international community is once again viewing Pakistan with suspicion. Without improvement to its system, Pakistan could find itself facing the same level of international economic isolation as it did previously.

Why could non-compliance with FATF hurt Pakistan’s economy?

The Financial Action Task Force (FATF) wrapped up its fourth plenary session in Paris, France, under the presidency of Mexico’s Elisa de Anda Madrazo, where a clear emphasis was placed on working to deprive criminals across the globe of the money they made through illegitimate means. As per an official statement from the FATF, delegates from the Task Force’s Global Network of more than 200 jurisdictions and observers participated in three days of discussions to address key issues in the fight against illicit finance.

STORY HIGHLIGHTS

1. The Financial Action Task Force (FATF) issued a stern warning to Pakistan.
2. Pakistan was added to the FATF’s grey list in 2018 due to allegations of inaction on financial backing to terror groups.
3. FATF’s latest severe warning suggests that the international community is once again viewing Pakistan with suspicion.
4. If the FATF identifies a country as high risk, it negatively affects foreign investment, banking, and international transactions in that country.

If the FATF identifies a country as high risk, it negatively affects foreign investment, banking, and international transactions in that country. Hence, Pakistan fears the anger of the FATF in case it worsens its already fragile economy.