e list may face economic sanctions from world’s financial institutions and experience adverse effects on trade.The countries on the grey list are assessed directly by FATF or FATF-style regional bodies (FSRBs) to report on their progress.. The grey list is updated regularly. The current FATF grey list, issued on 23 October 2020, includes sixteen following countries: Albania, the Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Myanmar, Nicaragua, Pakistan, Panama, Syria, Uganda, Yemen and Zimbabwe.
FATF and FATF-Style Regional Bodies (FSRBs)
The Asia/Pacific Group on Money Laundering (APG) is one of the FSRB. It is an inter-governmental organisation consisting of 41 members (12 are also members of FATF) in the Asia-Pacific region. The purpose of APG is to ensure the adoption, implementation, and enforcement of internationally accepted AML and CFT standards and proliferation financing standards set by FATF. APG was created in 1997. It is an Associate Member of the FATF since 2006. MER and follow up of Pakistan is done by APG.
Follow-up Process FATF And FSRBs
The follow-up process enables FATF and the FSRBs to track progress made by countries in addressing their AML/CFT risks and deficiencies. Follow up process are of two types:-
(i) Regular follow-up as the default monitoring mechanism, based on a system of regular reporting.
(ii) Enhanced follow-up, involving a more intensive process of follow- up, for countries with significant deficiencies, or countries making insufficient progress. In deciding whether to place a country in enhanced follow- up, the Plenary considers both the level of technical compliance and of effectiveness reached by the country
FATF, PAKISTAN AND ‘GREY LIST’
Pakistan has undergone a mutual evaluation in 2009 and 2019. The MER-2009 pointed out strategic deficiencies in Pakistan’s AML/CFT regime and, in consequence, Pakistan made the political commitment at the highest level to address such deficiencies in a time-bound manner. However, Concerned with the tardy pace of implementation, on June 24, 2011, the FATF observed: “The FATF is particularly concerned with the lack of implementation regarding Pakistan’s terrorist financing offence and calls upon Pakistan to demonstrate specific action.” Subsequent to this, Pakistan was put on the grey list on October 19, 2012. While grey-listing, FATF appreciated Pakistan’s efforts in some technical areas but remarked: “However, despite Pakistan’s high-level political commitment…Pakistan needs to enact legislation to ensure that it meets the FATF standards regarding the terrorist financing offence and the ability to identify, freeze, and confiscate terrorist assets.”
Pakistan came out of the grey list on February 27, 2015 with FATF remarking: “Pakistan will work with APG as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report, in particular, fully implementing UNSC Resolution [United Nations Security Council Resolution 1267.” Pakistan got out of the grey list by adopting some legal measures in form but saving its “strategic assets”(terrorists), which were sanctioned under UNSCR 1267. Pakistan’s elected government writ is limited. Pakistan Army runs the policy to be adopted for Pakistan-based terrorist organizations. FATF accepted political commitment without understanding that it had no mandate to do so. Pakistan’s deceit coupled with FATF’s ignorance enabled it escaping the grey list. A decision taken on doubtful assurances and without considering effective performance had to be revisited. Three votes from the FATF’s members are needed for a country not to be put in the grey list. China, Turkey and Saudi Arabia ( leading the six-nation Gulf Cooperation Council (GCC) ,that voted as one bloc, were against Pakistan being put in the grey list. Saudi Arabia, with some coaxing by US, understood Pakistan’s game and China opted for a larger role in FATF rather than support Pakistan Thus, Pakistan was again grey listed in June 2018. From Jun 18 Pakistan continues to fail to meet the successive deadlines set b