FATF’s Extended Oversight Threatens Pakistan’s Economic Survival

By the STAIKOU DIMITRA

(FREELANCE JOURNALIST , PROFESSIONAL WRITER ABOUT INDIA,PAKISTAN,BANGLADESH
,CHINA AND MIDDLE EAST IN GREEK AND INTERNATIONAL PRESS)

The seriousness of Pakistan’s fiscal concern became evident during the FATF plenary gathering held successful Strasbourg from 10 to 13 June 2025. Pakistan was expecting a regular reappraisal but alternatively the country’s surveillance was extended for 2 much years. The determination of the planetary watchdog connected wealth laundering and violent financing sends a wide message. Pakistan’s efforts to code planetary concerns astir violent financing and wealth laundering stay inadequate.

Despite Pakistan’s claims of improved finances, the FATF has made it abundantly wide that Islamabad has failed to code concerns astir violent financing. The accustomed suspects, Maulana Masood Azhar , Jaish e Mohammed and Lashkar e Taiba proceed to run with the government’s blessing. What makes the FATF reprimand peculiarly damaging is the timing of it. Pakistan’s system looks similar a insubstantial operation acceptable to illness with the incorrect handling. Foreign speech reserves are dangerously low, outer indebtedness has exceeded $130 cardinal and the state faces indebtedness work obligations that would situation adjacent steadfast economies. Now, the FATF has efficaciously sent a connection to the satellite that Pakistan remains an unreliable spouse successful the combat against fiscal crime.

The state has been grey-listed 3 times since 2008, losing astir $38 cardinal successful economical opportunities during those periods. Of course, the erstwhile grey listings were made erstwhile Pakistan was much economically comfortable. Today’s circumstances are rather different. Pakistan is already connected the brink of bankruptcy, which makes immoderate further fiscal constraints disastrous. The state has mislaid its creditworthiness arsenic it has nary credibility.

Now Pakistan’s transactions with overseas banks necessitate enhanced owed diligence that makes transactions slow, costly and often impossible. Moreover, overseas investors are fleeing and recognition ratings are plummeting. Access to export markets becomes much difficult. For a state already struggling to wage its bills, these restrictions could beryllium fatal.

Pakistan’s debt-to-GDP ratio has reached 107%, a fig that would interest economists adjacent successful developed countries. Annual indebtedness servicing consumes implicit $8 billion, wealth that the authorities desperately needs for basal services and development. International Monetary Fund bailout packages travel with stringent conditions, including FATF compliance requirements. If Pakistan returns to the grey list, aboriginal IMF assistance becomes dubious astatine best.

The FATF’s condemnation of the onslaught successful Pahalgam, Kashmir connected 22 April 2025 marks a important change. Rarely does the organisation nexus circumstantial violent incidents to broader backing problems. The FATF’s connection connected the Kashmir onslaught that specified incidents “could not person occurred without wealth and means to determination funds among supporters of terrorism” straight challenged Pakistan’s communicative that it is simply a unfortunate of coercion and not a authorities sponsor.

What is peculiarly worrying for Pakistan is the FATF’s accent connected the effectiveness of the combat against coercion and not conscionable connected compliance with the law. Previously, Islamic countries could often debar scrutiny by passing laws and creating institutions connected insubstantial portion allowing violent networks to run unaltered. The FATF present demands impervious that counter-terrorism measures really work, not conscionable that they beryllium successful ineligible texts.

In particular, the shipment of dual-use goods specified arsenic chemicals, encryption bundle and drones is strictly regulated by planetary treaties to forestall the proliferation of weapons of wide destruction. However, though superior controls are successful place, Pakistan’s paramilitary organisations effort to get distant with going beyond the limits. When Indian customs stopped the introduction into the state of Chinese-origin goods destined for Pakistan’s National Development Complex successful 2020, it revealed systematic efforts to get rocket exertion done fake documents. The caller FATF study highlighting this incidental shows that the bureau links the incidents betwixt its financing and proliferation of arms for illicit transgression activities.

Pakistan’s earlier delisting from the FATF grey database successful October 2022 ,turned retired to beryllium premature .The state had past completed the method requirements, but failed to show existent committedness to dismantling violent networks arsenic cardinal instigators of coercion stay astatine ample and backing channels stay progressive .

Terrorist groups operating from Pakistani ungraded endanger the stableness of the state and the full of South Asia. When planetary fiscal institutions restrict transactions with Pakistan, they are not conscionable punishing a country, they are trying to stifle the sources of backing for violent groups.

Pakistan’s economical isolation creates unsafe dependencies. With Western fiscal institutions present progressively reluctant to get involved, Pakistan is progressively babelike connected Chinese financing done projects specified arsenic the China-Pakistan Economic Corridor (CPEC). While Chinese concern provides short-term relief, it often comes with strings attached that compromise Pakistan’s sovereignty and load aboriginal generations with unsustainable debt.

The quality outgo of economical isolation besides needs attention. Pakistani expatriates look accrued scrutiny erstwhile sending remittances home, perchance reducing these captious overseas speech flows. Legitimate businesses find it hard to commercialized internationally. Students find it hard to wage for acquisition abroad. The full Pakistani diaspora suffers erstwhile their homeland becomes an economical pariah.

Unfortunately, Pakistan is facing progressively hard choices and decisions. Real compliance with the economical enactment radical requires arresting high-profile terrorists, stopping fiscal operations and abandoning the argumentation of utilizing militant groups arsenic overseas argumentation tools. Such changes would correspond a cardinal displacement successful Pakistan’s strategical modus operandi.