Pakistan has worked incessantly to comply with the requirements laid down by FATF—the government has passed through impactful legislative reforms, tightened financial controls and kept up active communication with the international body. This effort has been recognised by FATF; the regional body of FATF, in its follow-up report published on Thursday, stated that Pakistan was now in the top tier of countries that have achieved a rating of compliant/largely compliant. The Asia Pacific Group, in its third Mutual Evaluation Report (MER), has found that out of 40 recommendations, Pakistan has been declared compliant or largely compliant on 35 recommendations in order to combat money laundering and terror financing.
These findings have led Pakistan to have an improved rating on four more of the 40 recommendations, leaving three requirements partially compliant and only two being non-compliant. Pakistan has been ranked largely compliant in all the big six recommendations of FATF, which are difficult to implement.
However, despite these positive developments, Pakistan has still been retained in the ‘Enhanced Follow up’ category. The country is still on the grey list and must continue to report back to APG on progress to strengthen its implementation of AML/CFT measures, considering we have been seen to be lagging behind on the risk assessment of financial groups—although this does not even specifically tie in with AML itself.
Compared to other G20 countries, Pakistan ranked only lower than the UK, Italy and Saudi Arabia. There is no logical explanation for why Pakistan should be retained on the grey list, considering there are many countries with far worse records that are not given the same treatment.
Only a few formalities are left for Pakistan to become fully compliant—we could not have done more to appease FATF. The only conclusion behind this retaining is the play of politics in FATF and international bodies. Nevertheless, Pakistan should not pay heed to this and complete its commitments for its own sake.
Published in The Nation on 15th August 2021