The international money-laundering watchdog put the country on its so-called grey list in June 2018, after Islamabad failed to implement policies aimed at stamping out money laundering and the financing of international terror groups.
The move severely curtailed exchange flows and discouraged foreign direct investment by putting reams of red tape around even the simplest projects.
In a statement on Friday, the Paris-based organisation said it "welcomes Pakistan's significant progress" in its anti-money laundering efforts.
"Pakistan is therefore no longer subject to the FATF's increased monitoring process," it added.
“The FATF welcomes Pakistan’s significant progress in improving its AML/CFT regime. Pakistan has strengthened the effectiveness of its AML/CFT regime and addressed technical deficiencies to meet the commitments of its action plans regarding strategic deficiencies that the FATF identified in June 2018 and June 2021, the latter of which was completed in advance of the deadlines, encompassing 34 action items in total. Pakistan is therefore no longer subject to the FATF’s increased monitoring process,” read the statement.
“Pakistan will continue to work with the APG to further improve its AML/CFT system,” the statement added.
Separately, the FATF president told a news conference that Pakistan required no further work to do.
The FATF, in June, had hinted at Pakistan’s removal from the grey list after it concluded that Pakistan complied with the 34-point plan of action and agreed to send its team for the verification of those steps.
Pakistan was placed on the grey list by the FATF in June 2018 for deficiencies in its system to curb money laundering and terror financing. It was first given a 27-point action plan and later another 7-point plan to comply with the FATF’s standards.
The major stumbling block was the prosecution of certain UNSC designated individuals accused of terror financing. Just days before the June plenary FATF meeting in Berlin, Pakistani anti-terrorism court convicted Sajid Mir in terror financing case, something that convinced the FATF members to acknowledge Pakistan’s progress.
Pakistani officials were confident that the FATF team would give a positive assessment of the country’s progress. Officials, however, cautioned that the neighboring country might still use its influence to drag Pakistan’s case.
The United States is believed to have played a key role in ensuring the on-site visit for Pakistan as it expressed satisfaction with the country’s measures to curb terror financing, particularly prosecuting the certain individuals.
The exit from the FATF grey list will restore Pakistan’s image and give confidence to the foreign investors for doing ventures in the country. The grey listing makes it hard for countries to do financial transactions and raises the cost of doing business.
Pakistan’s removal from the grey list will help give impetus to its struggling economy.