On October 21, 2022, Pakistan was removed from the grey list of the global financial watchdog Financial Action Task Force (FATF) after a period of 4 years.
In a statement, FATF said:
“Pakistan is no longer subject to FATF’s increased monitoring process; to continue to work with APG (Asia/Pacific Group on Money Laundering) to further improve its AML/CFT (anti-money laundering & counter-terrorist financing) system,”
Pakistan PM Shehbaz Sharif, who took over in April 2022, after the overthrow of the Imran Khan led Pakistan Tehreek-E-Insaaf (PTI) government hailed the efforts of Pakistan’s civil and military leadership and specifically credit Pakistan Army Chief, General Qamar Javed Bajwa and Pakistan Foreign Minister Bilawal Bhutto for playing an important role in ensuring that Pakistan was removed from the grey list of FATF . Said Shehbaz Sharif in a tweet:
‘I would particularly commend the role & efforts of Foreign Minister Bilawal Bhutto, Army Chief General Qamar Javed Bajwa and their teams & all political parties for putting up a united front to get Pakistan out of the grey list’.
Members of the Pakistan Tehreek-E-Insaaf party (PTI) also lauded the previous government for the role it had played in ensuring that Pakistan is out of the FATF grey list.
Pakistan moving out of the FATF Grey list is important for a number of reasons. Firstly, this decision comes weeks after the Biden administration approved a USD 450 million F-16 fighter jet fleet sustainment programme to Pakistan for dealing with counterterrorism threats. This decision was announced On September 8, 2022 and was Washington’s first major security assistance to Islamabad in four years (in 2018, Biden’s predecessor Donald Trump had suspended USD 2 Billion aid to Pakistan for failing to take action against terror groups.
This decision was attributed to a number of factors, by analysts. First, US needed to work with Pakistan for counter terrorism operations (Washington wants to use US airspace to keep the Taliban in check). Second, the US wanted to prevent Pakistan from developing closer security ties with China. Third, US ties with Pakistan have improved ever since the government led by Shehbaz Sharif has taken over, though remarks by the US President with regard to Pakistan being the most dangerous country, ‘possessing nuclear weapons without any cohesion’ were not taken to kindly by Pakistan.
Most importantly, Pakistan’s economy is facing significant challenges, and its removal from the grey list of FATF, will remove some hurdles to seeking financial assistance from Asian Development Bank ADB, World Bank. In the aftermath of the floods, Pakistan had been appealing for the removal from the grey-list. The removal from the FATF also shows that while ties between the west and Pakistan may have deteriorated in recent years, with Islamabad moving closer to China, both sides realize that they need to keep a manageable relationship (while Pakistan had support from China and other countries, the removal from the grey list would have not been possible without support from the west – especially US)
In conclusion, removal from FATF is no panacea for Pakistan’s economic challenges but it is definitely a face saver for the country, and could help in terms of getting financial assistance from international organisations.
