Pakistan was removed from a global money laundering watchlist on Friday, officials said, a move Islamabad hopes will facilitate foreign investment and boost the country’s beleaguered economy.
The Financial Action Task Force, an international money laundering watchdog, put Pakistan on its so-called gray list in June 2018, after Islamabad failed to implement policies aimed at eradicating money laundering. money laundering and the financing of international terrorist groups.
This decision drastically reduced trade flows and discouraged foreign direct investment by imposing tons of red tape on even the simplest projects.
In a statement on Friday, the Paris-based FATF said it “welcomes Pakistan’s significant progress” in its anti-money laundering efforts.
“Pakistan is therefore no longer subject to the enhanced surveillance process of the FATF,” he added.
Pakistan’s Foreign Ministry said in a statement that the decision was “long-awaited good news”.
“Congratulations to the people of Pakistan,” Foreign Minister Bilawal Bhutto Zardari tweeted.
Although this decision is a boost for the country’s image, it should not have an immediate effect on the economy.
“The decision will help remove the uncertainty currently hanging over the overall investment climate in the country,” said Pakistani economist Kaiser Bengali.
Although removing one of the main obstacles to foreign investment, Bengali warned that high inflation and high interest rates would prevent a sudden inflow of liquidity.
Pakistan, which has long struggled with low-level militancy within its borders, has come under scrutiny for its ability to tackle illicit funding, including to militant organizations.
In 2017 and 2022, US regulators levied significant fines on separate Pakistani banks for ignoring concerns about possible terrorist financing and money laundering.
But in June, former FATF Chairman Marcus Pleyer said Pakistan had demonstrated that it was pursuing terrorist financing investigations and prosecutions of senior leaders of UN-designated terrorist groups and investigations on money laundering.
Friday’s FATF decision comes after Pakistan filed terrorist financing amendments against several senior Lashkar-e-Taiba leaders in recent years, including the group’s founder Hafiz Saeed and his brother-in-law Abdul Rahman Makki. the United States and India have accused of being involved in the Bombay bombings in 2008.
Talat Masood, a former general and now a political analyst, told AFP that security doubts were affecting confidence in Pakistan.
“This decision will improve our image and establish the fact that Pakistan does not support any terrorist organization and is a safe destination for foreign investment,” Masood said.
Pakistan was already struggling to get its finances in order, with a cost of living crisis, a plummeting rupee and dwindling foreign exchange reserves, when devastating floods caused at least $30 billion damage and loss and have driven up inflation and food prices. .
Rating agency Moody’s later downgraded Pakistan’s sovereign credit rating, saying the floods had exacerbated Pakistan’s liquidity and external credit weaknesses.
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