Pakistan Wants India Removed From FATF

A LETTER FROM PAKISTAN

On March 9, 2019 Pakistan wrote a letter to the president of the Financial Action Task Force (FATF) ,  requesting for the removal of India from one of FATF’s regional sub-divisions responsible for reviewing its progress. FATF has listed Pakistan among the “grey-listed’ countries.

India, which co-chairs the FATF’s Asia-Pacific Joint Group, has long demanded that Pakistan meet certain established standards, especially with regard to terror financing. 

According to a report in Dawn, Pakistani Finance Minister Asad Umar has demanded that India be replaced by any other country as the co-chair of the joint group.

The letter cites “India’s animosity towards Pakistan” is a reasons for its request, especially due to the recent act done by India  “recent violation of Pakistan’s airspace and dropping of bombs” in retaliation of the Pulwama terror attack.

REQUEST TO BAN INDIA FROM FATF

“Given clear Indian motivation to hurt Pakistan’s economic interests, Indian presence among the

evaluators and as co-chair of the Joint Group would undermine the impartiality and spirit of the peer

review process, which lies at the heart of FATF’s methodology and objective assessment,”

WHAT IS FATF?

The Financial Action Task Force (FATF) is an inter-governmental body which was established in 1989 by the Ministers of its Member jurisdictions.

The FATF headquarter is in Paris,France.

The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

 FATF currently have 36 member jurisdictions and 2 regional organisations, representing most major financial centers in all parts of the globe.

PAKISTAN’S GREY LIST ENTRY

The FATF in February 2018 nominated Pakistan for extensive monitoring of its “serious deficiencies” in countering terror financing, under the International Cooperation Review Group (ICRG) commonly known as the grey list. The nominations were supported by the US, the UK, France, Germany and India.

IF A COUNTRY COMES IN THE GREY LIST, IT FACES MANY PROBLEMS LIKE

1. Economic sanctions from international institutions (IMF, World Bank,ADB etc.) and countries.
2. Problem in getting loans from international institutions (IMF, World Bank, ADB etc.) and countries.
3. Overall Reduction in its international trade.
4. International boycott.

WHAT IS THE GREY LIST?

FATF has 2 types of lists- Black list and Grey list.

The countries that are considers as uncooperative tax havens comes under FATF's Black list

The black list countries are also known as Non-Cooperative Countries or Territories (NCCTs).

WILL PAKISTAN ENTER BLACK LIST?

China has become the biggest lender to Pakistan surpassing Japan. Pakistan owes $19 billion (1/5 of its total debt) to China.

The CPEC loans will add $14 billion to Pakistan’s total public debt, raising it to $90 billion by June 2019, abating Pakistan’s economic ability to service huge amount of debt.