Pakistan likely to exit FATF grey list this week after 4 years of scrutiny on terror financing

New Delhi is closely monitoring the FATF decision as a reprieve for Pakistan reflects improvement in the country’s ties with Washington

Pakistan is expected to be taken off the Financial Action Task Force grey list at the global watchdog body’s plenary session in Paris this week, although it will be asked to update members on its actions to counter terror financing and money laundering on a regular basis, in a decision that India will monitor closely.

The final decision on Pakistan, which has faced stringent financial sanctions and difficulties in availing international loans as a result of the FATF grey list, or “jurisdictions under increased monitoring” list since February 2018, will be announced at the end of the two-day session on October 20-21.

Minister of State for Foreign Affairs Hina Rabbani Khar landed in Paris on Tuesday to lead the Pakistani delegation and to iron out any last-minute wrinkles. A reprieve from the grey list will come as a major relief for Pakistan that is in the midst of an economic crisis, and is believed to also reflect an improvement in ties between Islamabad and Washington, officials said.

In Islamabad, the Dawn newspaper reported that Pakistani officials believed that the government’s “strenuous efforts” and “a smooth and successful visit” on-site by an FATF delegation to Islamabad and Lahore last month had ensured a favourable outcome at the plenary session this week.

However sources said that even after Pakistan is cleared to exit the grey list, it will be subject to continued scrutiny by the FATF, and will need to regularly report on its actions to continue the steps it has taken on Anti Money Laundering and Combating the Financing of Terrorism and (AML/CFT).

While New Delhi will keep a close eye on those actions, the government will also face a scrutiny of India’s record on AML/CFT with a periodic Mutual Evaluation Report (MER) process for India beginning in 2023.

In addition to the Pakistan question, during this plenary, the FATF is expected to take up China’s follow up of its evaluations, as well as Western proposals to suspend Russia from the FATF participation due to the war in Ukraine,.