Pakistan Current Affairs

Financial Action Task Force places Pakistan in Grey List for failing to curb terror financing

The Financial Action Task Force (FATF) at its plenary meeting in Paris, France has officially placed Pakistan on its Grey List of countries involved in providing monetary assistance to terrorism and related causes for failing to curb terror financing on its soil. FATF also has laid out 10-point action plan for Pakistan for compliance with its guidelines. If Pakistan fails in implementing the elaborate action plan, it may result in being included in FAFT’s Black List in 2019. This will be second time Pakistan has been grey listed by FATF, for first time it was placed in the list for three years from 2012 to 2015.

Impact of Grey-listing

It will endanger Pakistan’s handful of remaining banking links to outside world, causing real financial pain to its fragile economy. It will squeeze Pakistan’s economy and make it harder to meet its mounting foreign financing needs, including potential future borrowings from International Monetary Fund (IMF). It will lead to downgrading of Pakistan’s debt ratings by international banking and credit rating agencies, making it more difficult to tap funds from international bond markets. It will also suspend international funds and aid to Pakistan such as Coalition Support Funds (CSF), money which US owes to Pakistan for military operations. It will lessen investors’ confidence in Pakistan and also impacts its imports and exports, widening its existing huge current account deficit (CAD).

Financial Action Task Force (FATF)

FATF is an inter‐governmental policy making body that aims to establish international standards for combating money laundering and terrorist financing. It was established in 1989 during the G7 Summit in Paris (France) to combat the growing problem of money laundering.

It comprises over 39 member countries including India. FATF Secretariat is housed at headquarters of OECD in Paris, France. Initially, FATF was only dealing with developing policies to combat money laundering. But in 2001 its purpose was expanded to act against terrorism financing.

Mandate

FATF sets standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to integrity of international financial system.

Functions

  • Sets international standards to combat money laundering and terrorist financing.
  • Assess and monitor compliance with the FATF standards.
  • Conducts studies of money laundering and terrorist financing methods, trends and techniques.
  • Responds to new and emerging threats, such as proliferation financing used for promoting proliferation of nuclear, chemical and biological weapons.

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9 nuclear countries have total 14,935 nuclear warheads: SIPRI

According to updated count by Stockholm International Peace Research Institute (SIPRI), the number of nuclear warheads with nine nuclear countries has reduced from 14,935 at start of 2017 to 14,465 at start of 2018. These nine countries are United States, Russia, Britain, France, China, India, Pakistan, Israel and North Korea. SIPRI is an independent think tank that uses open sources to compile such data since 1966.

SIPRI’s report Highilgihts

Out of 14,465 nuclear warheads at the beginning of 2018, 3750 are actually deployed. This compared with 14,935 warheads at the start of 2017. Russia (with 6850 nuclear warheads) and US (with 6450 warheads) hold 92% of world’s total nuclear warheads. However, they have long-term programmes under way to replace and modernise their nuclear warheads and nuclear weapons production facilities.

World’s nuclear powers are reducing their nuclear arsenals but they are also modernising, putting fresh and worrying focus on strategic deterrence. The reduction is due to arms control commitments by US and Russia in 2010 Treaty on Measures for Further Reduction and Limitation of Strategic Offensive Arms (New START Treaty).

Britain has 215 nuclear warheads, France has 300, China has 280, India 130-140, Pakistan 140-150, Israel 80 and North Korea 10-20. These countries are either deploying or planning to deploy new nuclear weapons system. North Korea also demonstrated unexpected rapid progress in testing of two new types of long-range ballistic missile delivery systems for delivery of its nuclear weapons.

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