FATF should recognise Pakistan’s effort

In my August 15 analysis that appeared in Business Recorder “FATF: Keep your fingers crossed”, this writer said that chances of being upgraded are low because there is a lot of global politics and double standards involved.

In its October 23 announcement, FATF has asked Pakistan to complete an action plan by February 2021 and until then it will remain in its ‘grey list’.

The UN resolution demands best practices relating to codes and standards listed in its resolutions. It is asking to freeze accounts, put a travel ban and arms embargo on all those Individuals that are not acceptable to them.

Initially, the impact of the outcome on the economy should be taken positively by the market and the ongoing momentum is likely to continue.

Though Pakistan is taking all the necessary required measures and it is making best effort to meet the remaining six-targets. It is still a daunting task that demands maximum commitment from the law enforcement agencies and prosecution.

Staying in ‘grey list’ for next 4 months is painful and a very risky proposition, as the country is still faced with the downside risk because the immediate level below is ‘black’.

This means despite improving economic conditions international financial institutions and communities will hesitate to resume normal activity and the country will have to pay an extra cost. Rating agencies too will remain inactive on the positive side.

Pakistan estimates that grey-listing by FATF in the shape of damages is annually costing the economy nearly USD 10 billion.

This is why it is more important for the government to simultaneously make extra effort of lobbying with the international community and make them realise that Pakistan has effectively implemented the UN’s 1267 resolution and has made sufficient progress.

Pakistan should demand proper and separate evaluation of its effort, as with the passing of bill in Senate, the country has demonstrated responsibility and has successfully achieved financial transparency too.

Hopefully, remittances will continue to flourish and it is the best example to quote. To prove its point, Pakistan is required to make strong argument/case that despite the World Bank’s and other agencies’ claims that Pakistan’s remittances will fall by 20 percent, the rise in flow of funds is a clear sign that Pakistan has made a big leap.

Over the years, Pakistan has come a long way and its efforts need to be recognized. The country’s status, therefore, deserves to be elevated in FATF’s February 2021 gathering.

(The writer is former Country Treasurer of Chase Manhattan Bank)

Copyright Business Recorder, 2020