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Pakistan Escapes Terror-Financing Blacklist

Faseeh Mangi

(Bloomberg) -- Pakistan has made just enough progress on global anti-money laundering and counter-terrorism financing standards to escape being placed on a blacklist by the Paris-based Financial Action Task Force.

Pakistan has been asked to swiftly complete its full action plan by February 2020 and failure to do so can lead to a downgrade to the blacklist, FATF President Xiangmin Liu said at a briefing Friday at the end of its plenary meeting in Paris. Pakistan has only largely addressed five of 27 action items, with varying levels of progress made on the rest of the action plan, according to a statement.

Despite a high-level commitment for Pakistan to fix these weaknesses, it “has not made enough progress.” said Liu. “Pakistan needs to do more and it needs to do it faster.”

The decision to keep it on the gray list means that Pakistan will escape the tough sanctions on its banking system that would have accompanied any downgrade to the FATF blacklist. The International Monetary Fund had warned that moving Pakistan to the blacklist could cause capital inflows to freeze up and jeopardize its $6 billion program agreed to in May.

The announcement is likely to disappoint neighbor and rival India, which has long argued and lobbied at previous FATF meetings that Pakistan belongs on the blacklist.

The South Asian nation was placed on the gray list last year after a campaign by the U.S. and European nations to get the country to do more to combat militancy and close financing loopholes for terrorist groups.

FATF asked Pakistan to comply with a list of 27 measures -- including identifying and supervising terror financing risks and boosting controls on illicit currency movement -- to avoid joining Iran and North Korea on the blacklist.

New Delhi has blamed Islamabad of training and funding militant groups operating in India’s portion of Kashmir.

Hafiz Saeed, the man India says is the mastermind of the 2008 attacks in its financial capital Mumbai and who has a $10 million U.S.-imposed bounty on his head, was put under so-called house arrest, restricting his movement just before Prime Minister Imran Khan’s meeting with President Donald Trump in July. He has been arrested and released many times in the past.

In its previous review of Pakistan in June, FATF expressed concern that it had failed to meet the January and May deadlines for implementing the action plan. The nation was partially compliant with about half the targets in June, people familiar with the matter have said.

(Updates with new detail in first paragraph)

To contact the reporter on this story: Faseeh Mangi in Karachi at fmangi@bloomberg.net

To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Muneeza Naqvi

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