Pakistan taken off FATF grey list after 4 years: Why it matters for crisis-hit nation

NEW DELHI: After four long years, Pakistan on Friday finally wriggled its way out of the global anti-terror watchdog FATF's inglorious "grey list".
Pakistan has been under increased surveillance since June 2018 by the Financial Action Task Force (FATF) for its failure to check the risk of money laundering, leading to corruption and terror financing.
The decision to remove Pakistan from the list was taken at the end of a two-day meeting in Paris, said FATF president T Raja Kumar.
"Pakistan had addressed technical deficiencies to meet the commitments of its action plans regarding strategic deficiencies that the FATF identified in June 2018 and June 2021," Kumar said in a summary speech.

The move is significant for the crisis-hit country as it can now finally tap into foreign funds to tide over its precarious financial situation.
Access to much-needed finances
With Pakistan's exit from the "grey list", Islamabad may now have access to financial aid from the International Monetary Fund (IMF), the World Bank, the Asian Development Bank (ADB) and the European Union (EU) to boost its cash-strapped economy.
A boost to reputation
The FATF decision will be a reputational boost for Islamabad. A removal from the list marks the culmination of a four-year reforms process that has required far-reaching changes to Pakistan's financial system, in particular to laws governing money laundering and terrorism financing.

The country has worked through two separate action plans and completed a combined 34 action items to address deficiencies in their anti-money laundering and counter-terrorist financing systems to reach here.
"Pakistan exiting the FATF grey list is a vindication of our determined and sustained efforts over the years," Prime Minister Shehbaz Sharif said on Twitter.
What does FATF white-listing mean?
The FATF white-listing may not have an immediate impact on the country's struggling economy as a whole, but it will help reduce scrutiny of global transactions involving Pakistan, said economist and former Citigroup banker Yousuf Nazar.
It will help improve sentiments that had taken a hit after the country's sovereign credit rating was downgraded by Moody's. This will be important from a foreign direct investment perspective.
Pakistan will also claim that this is a vindication of its "high level political commitment" in dealing with terror financing and its resolve to carry out reforms.
Crackdown on terror groups
As a part of the reform measures mandated by FATF, Pakistan was supposed to act against terrorists on its soil.
Pakistan's actions to jail, fine and confiscate assets of individuals linked to anti-India terror groups could be among the key reasons for FATF reprieve.
"When Pakistan, in recent months, announced new sentences for Hafiz Saeed and Sajid Mir - two top terrorists of Lashkar-e-Taiba, one of the key terrorist groups under the FATF spotlight - that's what got things done in the end," said Michael Kugelman, director of the South Asia Institute at the Washington-based Wilson Center think-tank.
The two were involved in the 2008 Mumbai attacks in neighbouring India that killed over 160 people. Saeed was the mastermind of the attacks.
However, India has maintained that these arrests were nothing but "drama" to please the FATF.