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Signature Qualification CA that Empowers to Lead PAKISTAN The role of FATF is to assess the vulnerability of the countries to the money laundering and terrorist financing criminalities by evaluating their current laws and regulations of anti-money laundering and terrorist financing in practice along with their execution methodology. Grey list includes those FATF’s 40 recommendations which have ‘structural FATF has designed a set of 40 recommendations (counter-measures to money laundering and terrorist financing) which are updated from time deficiencies’ and to time. The salient features of these recommendations that every country should mandatorily have in their systems is to: loopholes in their ▪ Identify risks and threats prevailing in their existing systems and policies. ▪ Develop and implement policies and procedures to counter those risks and threats. Anti-Money Laundering ▪ Track money laundering, terrorist financing and financing of proliferation. laws and Combating ▪ Design precautionary measures for financial institutions and other relevant sectors including customer due diligence, record-keeping of suspicious transactions, etc. Financing of Terrorism ▪ Equip the competent law enforcement and other supervisory authorities regimes. with sufficient powers and responsibilities to control and prevent the occurrence of any potential criminal activities. ▪ Conduct fair accountability and transparency in the legal and judiciary systems. The role of FATF is to assess the vulnerability of the countries to the money laundering and terrorist financing criminalities by evaluating their current laws and regulations of anti-money laundering and terrorist financing in practice along with their execution methodology. FATF’s grey list and black list FATF, a 37 member multilateral body, has categorised countries in two different lists: Grey list includes those which have ‘structural deficiencies’ and loopholes in their Anti-Money Laundering (AML) laws and Combating Financing of Terrorism (CFT) regimes. Such countries commit with the FATF to address these insufficiencies in their laws, policies and systems through an action plan agreed with the international watchdog within a prescribed timeframe after which their name is removed if the FATF is satisfied that they are being compliant with the action plan agreed. Black list includes those countries which fail to apply measures to overcome the shortcomings and are considered as non-compliant high risk countries. Such countries are declared by FATF to be non-cooperative in the global Black list includes those fight against money laundering and terrorist financing and are called Non- Cooperative Countries or Territories (NCCT). At present, two countries, Iran countries which fail to apply and North Korea are included in the black list and heavy sanctions are being imposed by the body. measures to overcome the shortcomings and Pakistan’s inclusion in grey list and action plan In the beginning of 2018, Pakistan was placed for inclusion in the FATF grey are considered as non- list which, in turn, created the necessity for an independent assessment of its AML/CFT regime by FATF. The assessment highlighted ‘strategic deficiencies’ compliant high risk and which led to the official inclusion of Pakistan in the FATF grey list in June 2018. This is not the first time that Pakistan was included in FATF grey list; countries. in fact, it was first included in the list in 2008 and afterwards in 2012. It was due to the successful implementation of the FATF action plan that Pakistan’s 6 The Pakistan Accountant July - September 2018 July - September 2018 The Pakistan Accountant 7