Pakistan avoids terror financing blacklist … for now

Pakistan has until February to improve its counterterror financing operations in line with an internationally-agreed action plan, or risk being blacklisted, a global watchdog said.

The Paris-based Financial Action Task Force (FATF), which tackles money laundering, said on Friday it was concerned that Pakistan had failed to complete the action plan first by a January deadline, then a May deadline and now October.

However, it offered a reprieve to Prime Minister Imran Khan as he works to shore up his country’s faltering economy and attract foreign investments and loans.

“The FATF strongly urges Pakistan to swiftly complete its full action plan by February 2020,” it said in a statement.

“Otherwise, should significant and sustainable progress not be made across the full range of its action plan by the next Plenary, the FATF will take action.”

The FATF already has Pakistan on its “grey list” of countries with inadequate controls over curbing money laundering and terrorism financing. But India wants Pakistan to be blacklisted, which would likely result in sanctions.

In the statement, the FATF said Pakistan has addressed only five of 27 measures required to avoid being blacklisted.

“Pakistan needs to do more and it needs to do it faster,” FATF President Xiangmin Liu told reporters in Paris.

‘Strong political will’

Pakistan had been on the FATF blacklist for years before it was removed in 2015 following “significant progress” in fighting terror financing.

Only Iran and North Korea are currently on the blacklist.

Khan, elected last year, has been struggling to stamp out threats from armed groups while coming under pressure over painful austerity measures taken to rectify a shaky economy and conform to the terms of its latest International Monetary Fund (IMF) bailout.

“The Pakistani government has demonstrated strong political will to implement its action plan,” Liu said.

“We will provide all the necessary training and assistance, and we have called on our members and our global network to help in that regard,” he added.

Experts say the move means every international financial transaction with Pakistan will be closely scrutinised, and doing business in Pakistan will become costly and cumbersome.

International agencies could place restrictions on lending money to Pakistan, including key creditors such as the IMF, Asian Development Bank and the World Bank.

Meanwhile, the FATF expressed “disappointment” that Iran has failed to take the necessary steps to be removed from the blacklist and said it is asking all member countries to tighten scrutiny of any financial transactions involving Iran.

Virtual currencies such as bitcoin and Facebook‘s Libra are also prompting concern from the FATF, which warned of “new risks” from such products.

It said they’re being “closely monitored” to ensure they are not used to finance terrorism or launder money.