Pakistan Strategy: FATF expectedly retains Pakistan on ‘grey list’, acknowledges progress! , (AKD Daily, Feb 24, 2020)
Pakistan Strategy: FATF expectedly retains Pakistan on ‘grey list’, acknowledges progress!
- In its Feb’20 review, the Financial Action Task Force (FATF) has retained Pakistan on ‘grey list’ - formally known as ‘Jurisdictions under increased monitoring’, while extending the deadline to deliver on the action plan by another four months (next review is in Jun'20).
- The decision was broadly in line with market expectations. The official stance was mixed, carrying both carrots and sticks. The tone was relatively soft compared to the last one, with the statement acknowledging the ‘notable improvements’ and no mention of ‘serious concerns’.
- The probability of Pakistan dropping to the ‘blacklist’ officially referred to as ‘High-Risk Jurisdictions subject to a Call for Action’ is very low, considering the notable efforts it is making towards addressing the deficiencies and supportive geopolitical backdrop (i.e. steadfast diplomatic support from friendly countries and improved Pak-US relations).
- On the flip side, Pakistan’s exit from the ‘grey list’ appears unlikely in Jun’20, as graduation from list would not only require completion of action plan but the country pass an on-site assessment test as well.
- While the development within the FATF review session was largely in-line with expectations, the PSX may depict initial nervousness owing to perceived harshness of the statement. We believe any dip should be taken as an opportunity to accumulate, keeping a longer investment horizon.
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