Explainer: What is Financial Action Task Force and why is Pakistan in its 'grey list'?

Explainer: What is Financial Action Task Force and why is Pakistan in its 'grey list'?

It was found non-compliant on 32 of 40 compliance parameters related to terror financing and money laundering

Global financial crime watchdog Financial Action Task Force (FATF), which will hold its plenary session from June 14 to 17 in Berlin, was established by the G-7 Summit.

''The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society,'' according to its website.

Known as Groupe d'action financière in French, FATF has 35 members and its International Cooperation Review Group (ICRG) includes the US, the UK, France, China, and India.

FATF places those countries in its 'grey list' or "Jurisdictions Under Increased Monitoring” that pose a risk to the global financial system.

Due to its failure to curb funnelling of funds to groups responsible for scores of attacks in India, Pakistan has been placed in FATF’s ‘grey list’.

It was found non-compliant on 32 of 40 compliance parameters related to terror financing and money laundering by the Asia Pacific Group of the FATF.

Explainer: What is Financial Action Task Force and why is Pakistan in its 'grey list'?
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Adding to the financial problems of Pakistan, its continuance in the 'Grey List' means its downgrading by the IMF, the World Bank, the ADB, the EU and also a reduction in risk rating by Moody's, S&P and Fitch.

Pakistan, which has been under the FATF radar for its complicity towards terror groups LeT, JeM and others, was adjudged low on 10 out of 11 "effectiveness parameters" of terror financing and money laundering in its previous plenary session.

This was a result of its bluff of arresting members of terrorist organisations under Maintenance of Public Order (MPO) Act which states that a detainee beyond 60 days.

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