Pakistan has made efforts not be placed on FATF’s gray list, on which it previously remained for four years The Securities and Exchange Commission of Pakistan in June compiled and passed new regulations on financial institutions in line with AML/CFT standards of FATF ISLAMABAD: Pakistan is prepared to argue a persuasive case in its defense at the Financial Action Task Force (FATF) joint plenary in Paris this week to avoid inclusion on the international financial watchdog’s gray list of “jurisdictions with strategic anti-money laundering and combating the financing of terrorism (AML/CFT) deficiencies.” The six-day plenary week began on June 24 with “delegates from the 203 jurisdictions of the FATF Global Network, as well as the UN, IMF, World Bank and other partners” and concludes on June 29. Officials at the Ministry of Finance declined to comment to Arab News. The plenary rules prohibit participants from publicly divulging otherwise confidential information during sessions. FATF, incepted in 1989, is a global anti-money laundering and terror finance prevention intergovernmental organization that holds sessions three times a year. It has 37 members and two observer countries. Experts warn that Pakistan being placed on the gray list would carry a lot of repercussions. “This will definitely be a serious matter. Already the stock exchange is being affected and declining. Our future borrowing will be suffering and interest rates will rise, making it more expensive,” Humayun Iqbal Shami, president of Pakistan Economic Forum, told Arab News. He doubts Pakistan will be able to satisfy the Western-influenced financial watchdog. Pakistan has made efforts not be placed on FATF’s gray list, on which it previously remained for four years and was removed after compliance in 2015, said Dr. Vaqar Ahmed, joint executive director at Sustainable Development Policy Institute, to Arab News. “We have implemented the most stringent regulations on the financial sector to meet or exceed FATF standards which have adversely affected banking customers, discouraged domestic and international investors, and inflow and outflow of funds,” he said. Pakistan was previously able to withstand the impact of financial restrictions of FATF but the country’s debt rating fell from stable to “unsecure” last week on Moody’s Investors Service index, an international credit rating organization. “Low reserves adequacy threatens continued access to external financing at moderate costs, in turn potentially raising government liquidity risks,” the agency wrote in a statement. Under current circumstances, “the pressure becomes particularly acute if the country is facing pressures on the current account of the balance of payments as well as the local currency,” explained Ahmed. Islamabad has made strides to comply with FATF statutes following the US co-sponsored motion in February this year, backed by Britain, France and Germany, which emphasized concerns about the depth of Pakistan’s commitment to tackle money laundering and terror financing. Pakistan was unable to satisfy FATF then and subsequently the watchdog decided to place the country on its terror financing list from June if Pakistan could not counter illegal financial activities and seize assets of proscribed groups, entities, and individuals on a banned list from the UN Security Council (UNSC). “We had to impose three restrictions as per the UNSC resolution” on proscribed entities and organizations, NACTA CFT Director Qaisar Ashfaq told Arab News. “Our compliance on arms embargo and travel restrictions were found to be satisfactory. However, freezing of assets, on which there were (serious) reservations, (is where) we had not done enough.” Before FATF’s meeting in February, Pakistan initiated a seize, freeze and control operation against Jamaat-ud-Dawa and its charity wing Falah-e-Insaniat Foundation two days after President Mamnoon Hussain promulgated an amended Anti-terrorism Ordinance, 2018 to meet FATF requirements. The previous government’s term ended and no legislation was passed in support of the ordinance, which later expired, that was to recognize the UNSC declarations. The Securities and Exchange Commission of Pakistan in June compiled and passed new regulations on financial institutions in line with AML/CFT standards of FATF. Pakistan prepared an action plan for review by FATF. The interim government, headed by caretaker Prime Minister Nasirul Mulk, held its first National Security Committee meeting in June to discuss FATF plenary and in a statement announced satisfaction over measures taken by Pakistan to meet the standards. “In two months the country has taken concrete steps to meet FATF regulations. Pakistan has regulated the financial sector. But if this is politically motivated, Pakistan needs diplomatic backing from China, Saudi Arabia, and Turkey,” said Ahmed.