• The Financial Action Task Force (FATF) has decided to keep Pakistan on the “greylist” till the next review of its compliance to the recommendations in February 2021. 


  • Pakistan Remains on Grey List: 
  • The FATF had issued the 27-point action plan after placing Pakistan on the ‘Grey List’ in June 2018. The action plan pertains to curbing money laundering and terror financing. 
  • This sequence of events has been continuing for nearly two years now, since Pakistan regressed to its “grey list” position in June 2018. As Pakistan continues to fail to meet the successive deadlines set by the FATF, the threats from the organisation are becoming shriller and, in response, so are protestations from Islamabad. 


  • Countries falling in “grey list” technically indicate that these jurisdictions have strategic deficiencies in their Anti-Money Laundering/ Countering Financing of Terror (AML/CFT) regime and they are considered for more regular monitoring. 
  • It also indicates that they have committed to remove such deficiencies in a time-bound manner. In contrast, countries in the “black list” are those that have been reported for enhanced due diligence. 
  • Generally, the black list comprises non-cooperative jurisdictions, which do not commit to improve upon the strategic deficiencies in their AML/CFT regime. 
  • The FATF listing makes it extremely difficult for Pakistan to get financial aid from the International Monetary Fund (IMF), the World 

Bank and the European Union. 

  • Post grey listing, Pakistan’s credit ratings were downgraded. This credit rating downgrade has a negative impact on rate of interest which, in turn, has adverse impact on economic growth. 

Financial Action Task Force 

  • Formation: The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 during the G7 Summit in Paris. 
  • Objectives: 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. 
  • Secretariat: Its Secretariat is located at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris. 
  • Member Countries: The FATF currently has 39 members including two regional organisations — the European Commission and Gulf Cooperation Council. India is a member of the FATF. 
  • Decision Making Body: The FATF Plenary is the decision making body of the FATF. It meets three times per year. 

Lists under FATF: 

  • Grey List: Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list (or ‘Jurisdictions under increased monitoring’). This inclusion serves as a warning to the country that it may enter the blacklist. 
  • Black List: Countries known as Non-Cooperative Countries or Territories (NCCTs) are put in the blacklist. These countries support terror funding and money laundering activities. The FATF revises the blacklist regularly, adding or deleting entries. As of this year, there are only two countries on the FATF’s black list – North Korea and Iran. 

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