FATF's Asia Pacific arm blacklists Pakistan for not curbing terror-funding
What's the story
In a big setback for Pakistan, the Asia Pacific division of global terror watchdog Financial Action Task Force (FATF) has put the country on its blacklist over its failure to curb terror financing. The Asia-Pacific Group (APG) took the decision after it concluded its meeting in Canberra, Australia. To recall, Pakistan has already been placed on the greylist of FATF. Here are more details.
Decision
Pakistan didn't comply with 32 out of 40 parameters
As per reports, the APG put Pakistan on its Enhanced Expedited Follow Up List (Blacklist) for failing to meet standards. The group, which had discussions for over seven hours in two days, found that Pakistan didn't comply with 32 of the 40 parameters of terror financing and money laundering. In fact, on 11 parameters, Pakistan was adjudged as low on 10.
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APG judged what Pakistan did in last five years
Reportedly, APG assessed Pakistan's Mutual Evaluation Report (MER) in curbing terror financing in the last five years and concluded that the country didn't do enough. As a result, Pakistan was placed in the fourth and lowest rung of APG's Follow Up (FU) listing.
Defense
Pakistan submitted a humongous report to defend itself
With the hope of improving its ranking, Pakistan submitted a 450-page report, last week, detailing the changes the government made in the laws recently. Islamabad claimed it charged Lashkar-e-Taiba head honcho Hafiz Saeed and took concrete steps against him. It also said assets of Jamaat-ud Dawa (JuD), another outfit founded by Saeed, and other terror groups were frozen too.
Details
Further, a high-ranking Pakistani official explained the country's side
Interestingly, governor of Pakistan's state bank, Reza Baqir led a team of ten members to explain his country's side. A statement from Pakistan's finance ministry read, "The report does not cover areas in which the government of Pakistan has made substantial progress since October 2018." While the country hoped for some reprieve, the 41-member plenary, whose part Pakistan is since 2000, wasn't convinced.
FATF
The latest listing could affect FATF's review
Notably, this new development certainly brings trouble for Pakistan as it will now find it difficult to convince FATF to remove it from the greylist. The country has time till September to act on 27 points given by FATF. After a review, FATF, which greylisted Pakistan in June 2018, will decide whether to remove it from the list or downgrade it to the blacklist.
Repercussions
Pakistan can't relax till it improves its ratings
As it turns out, Pakistan should worry even if FATF decides to keep it on greylist. If Pakistan's ratings don't improve, it faces a risk of being downgraded by the International Monetary Fund, World Bank and Asian Development Bank. Further, credit rating agencies like Moody's, Standard & Poor's and Fitch will also give it poor points, which could increase problems for the cash-strapped country.