In view of Pakistan’s recent removal from the grey list, evaluate the performance of FATF in fighting terror financing.

The Financial Action Task Force (FATF) has recently decided to remove Pakistan from its grey list.  The step has been taken keeping in mind the country’s significant progress in strengthening legal and government mechanisms and enhancing the monitoring capacity.

FATF:

• FATF is an intergovernmental organization to combat global money laundering and terrorist financing.
• It also aims to counter the financing of proliferation of weapons of mass destruction.
• It was founded in 1989 on the initiative of the G7 countries.

Pakistan on Grey list:

• A country is placed in the FATF grey list to enhance monitoring to check its progress on measures combating money laundering and terror financing.
• Pakistan was put on FATF Grey List in 2018, for deficiencies in its Anti-Money Laundering/Combating the Financing of Terrorism regime.
• Pakistan was presented with a 34-point action plan to check terror financing.
• This grey-listing impacts the government’s access to international finances including assistance from multilateral agencies and from private lenders.
• This led Pakistan to comply with the directions of FATF else there were chances of being blacklisted.

Way forward:

India’s interests lie in playing the long game in these diplomatic battles with the goal of making the region more stable and secure.

Topics: GS-II: Important International Institutions Agencies and Fora • GS-III: Money Laundering and Its Prevention