Financial Action Task Force concludes latest review . . .
The Financial Action Task Force (FATF), an intergovernmental financial watchdog, has decided not to include Pakistan on its ‘blacklist’ and has added Mongolia to its ‘greylist,’ while issuing specific recommendations for both. The FATF was established in 1989 by the G7 to combat money laundering. Its mandate expanded after 2001 to include combating terrorist financing and nuclear proliferation. Headquartered at the OECD in Paris, FATF has 37 member countries, including Canada, and conducts regular evaluations of over 200 jurisdictions, closely monitors countries on the ‘greylist,’ and increases international financial pressures on countries on the ‘blacklist.’
Pakistan, Mongolia greylisted, Sri Lanka delisted . . .
The FATF has delayed its decision to include Pakistan on its ‘blacklist,’ which includes Iran and North Korea, but will conduct another review in February 2020. Although Pakistan has made high-level political commitments since June 2018, it failed on 22 of the FATF’s 40 parameters, especially areas to combat terrorism financing, and is currently ‘greylisted.’ Mongolia, again as in 2014-2016, is included on the ‘greylist’ – along with Iceland and Zimbabwe – due to its failure to address money-laundering and corruption. In contrast, Sri Lanka has been removed from the ‘greylist’ as the government corrected institutional deficiencies identified by the FATF in 2016.
Foreign investment implications . . .
The FATF ‘greylisting’ has negative implications for countries like Mongolia and Pakistan, as both have been struggling to attract foreign investment and rely on International Monetary Fund (IMF) bailout packages to offset economic crises. The IMF has been negotiating since last October to provide Pakistan with C$8 billion while Mongolia has been implementing a C$7 billion IMF package since 2017. Because of the scope and technicality of the FATF evaluations, they are highly regarded by financial institutions as well as member countries, leading to direct impacts on foreign investment.
- FATF: Outcomes FATF Plenary, 16-18 October 2019
- The Wall Street Journal: Anti-Money-Laundering Watchdog puts more Pressure on Iran
- Financial Times: Pakistan warned to curb terrorist financing