Deadline extended because of coronavirus outbreak
The Financial Action Task Force, an inter-governmental body that combats threats to the international financial system, has extended Pakistan’s deadline from June to October to take steps to avoid being placed on its blacklist.
The deadline has been extended because of the outbreak of COVID-19. It will now meet from October 21 to October 26 in Beijing.
In February 2020, the FATF expressed concerns over “Pakistan’s failure to complete its action plan in line with the agreed timelines and in light of the Terrorist Financing risks emanating from the jurisdiction,” it said in a report.
The global watchdog for illicit financial activities had put Pakistan on its grey list in June 2018 because of weaknesses in the country’s Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) laws.
The grey list refers to countries or jurisdictions under increased monitoring because of strategic AML and CFT deficiencies. After being placed on the grey list, Pakistan had developed an action plan with the FATF to address those deficiencies, but fell short of targets.
“The FATF strongly urges Pakistan to swiftly complete its full action plan by June 2020,” the report said, noting Pakistan has largely addressed 14 of 27 action items, with varying levels of progress made on the rest of the action plan.
Pakistan’s failure to fully comply with the FATF action plan will result in getting downgraded to the blacklist, which will have serious implications for Pakistan.
Being on the blacklist means our banking system will be regarded as one with poor controls over AML and CFT standards. This can affect capital inflows and lower investment to Pakistan and hurt the ongoing IMF programme. Raising funds from global capital markets will be difficult, which will undermine our ability to pay our foreign debt.