FATF’s Context

The global watchdog for money laundering and terrorist financing, which was established by the G-7 Summit held in Paris in 1989.It is an international policy making body which develops and promotes policies and drafts recommendations for the security of global financial system, to eliminate terror and other anti-social elements financing. It has nothing to do with law enforcement matters, investigations or prosecution. Presently it has 39 members.

FATF or the Organization for Economic Co-operation and Development (OECD) has two types of lists. Black list countries and grey list countries

Blacklist Countries[1]

Those countries which support terror funding and money laundering or do not show cooperation in the global fight against money laundering and terror funding are blacklist countries and also known as Non-Cooperative Countries or Territories (NCCTs). FATF updates list off and on depending on the cooperation from the blacklist countries. The purpose of blacklisting is to encourage countries to improve their policies implement standard of Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT). Black list is also considered as warning to the rest of the countries about high risk of money laundering and terror financing. Some black list countries do not have infrastructure or resources to implement  FATF’s AML/CFT standards.

Grey list Countries

Grey list or International Cooperation Review Group (ICRG) is a warning given to the countries that may be placed in black list, because these countries are considered safe place for supporting terror funding and money laundering. If a country fails countering terrorism funding it is shifted from grey to black list. Grey listed countries faces issues including[2]

1. Economic sanctions from international institutions (IMF, World Bank, ADB etc.) and countries

2. The problem in getting loans from international institutions (IMF, World Bank, ADB etc.) and countries

3. Overall Reduction in its international trade

4. International boycott


Pakistan’s legislations for FATF compliance

FATF published first blacklist in 2000. Whereas Pakistan included in grey list first time in 2012 till 2015, after that it was included in grey list again in 2018 (2nd time). Currently Pakistan is still in grey list and Pakistan is struggling to comply all 27 FATF targets.

On October 2019 Pakistan comply with few targets, and given time till February 2020 to comply all targets otherwise it would be blacklisted but again failed to comply all 27 targets. Now Pakistan is working on further legislative amendments expected to be implemented in the near future including[3]; some of bills are tabled where as some bills are passed


·         Foreign Exchange Regulation Act (Amendment) Bill 2020

·         Anti-Money Laundering (Amendment) Bill, 2019

·         Mutual Legal Assistance (Criminal Matters) Act (MLA) 2020

·         Amendments to the ATA 1997 (2020)

·         NACTA Amendment Ordinance 2019

·         Control of Narcotic Substances (Amendment) Bill 2020

·         The United Nations Security Council Amendment Bill

·         Benami Transactions (Prohibition) Rules 2019 and Benami Transactions Ordinance 2019

·         The Islamabad Capital Territory Trust Bill, 2020

·         1948 – Including rigorous penalties for proscribed terrorists and organizations under the United Nations (Security Council) Act of 1948. This includes upping fines to Rs. 200 million and prison sentences to 10 years.

·         1949 – Amendments to the Criminal Procedure Code (CrPC) to meet international standards.

·         Amendments to the Companies Act 2017 to comply with FATF standards in curbing money laundering.

As well as Pakistan now has a deadline September/October 2020 for complying on following 13 points[4]: