Pakistan has signed an agreement with the United Arab Emirates to combat money laundering and terror financing as it seeks to avoid being blacklisted by the Financial Action Task Force (FATF).

Under the memorandum of understanding (MoU) signed yesterday, Pakistan’s Financial Monitoring Unit and UAE’s Financial Intelligence Unit will exchange information and expertise, share data and collaborate to combat financial crimes.

“Signing the MoU reflects the strong commitment of the Pakistani government to enhance cooperation with the international community to combat money laundering and terrorism financing,” said Ghulam Dastigar, ambassador of Pakistan to the UAE.

Pakistan is currently on the FATF “grey list”, meaning it is under increased monitoring and has committed to resolve strategic deficiencies in its regime to tackle money laundering, terrorist financing and proliferation financing. 

In February, FATF said that Pakistan has only met 14 out of 27 actions agreed in its plan and strongly urged it to complete its agreed action plan by an extended deadline of June 2020.

FATF is expected to discuss whether to put Pakistan on its “black list” at its plenary in October. Being placed on the black list means a country is considered deficient in their AML and CTF regulatory regimes.

This makes it more likely the country could be subject to economic sanctions and can lead to financial institutions being more cautious about lending. Currently Iran and North Korea are the only countries on the black list.

Pakistan imposed sanctions on more than 80 terrorists associated with different groups in August.

However the country’s senate last month rejected two bills aimed at improving the country’s FATF situation. Imran Khan, prime minister of Pakistan, last month told ARY News: ““People talk about inflation now. If we are placed on the blacklist, we will experience inflation that would ruin our economy”

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