Pakistani Banks will be the first ones to bear the Brunt of FATF Grey Listing according to experts. The Financial Action Task Force (FATF) recently greylisted Pakistan for failing to put in place measures to check money laundering and other unauthorized transactions that may be used for funding terrorism.
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Pakistan’s enlistment in the grey list of watchdogs did not impact businesses instantly, but experts warned that the cost of doing business in Pakistan would amplify, and the condition for banks would become even more challenging.
On 27th June 2018, Pakistan was placed on the Financial Action Task Force (FATF) Grey List, symbolizing that Islamabad failed to control money laundering and other illicit transactions that may be used for funding terrorism.
While banks in Pakistan believe the repercussions would be felt quickly and the cost of doing business in Pakistan would soar. However, there is a difference this time (unlike between 2012-2015 when Pakistan was greylisted) that leading banks in Pakistan like Habib Bank, United Bank and National Bank are not working as correspondent banking channels. These were functioning during 2012-2015 which supported trading and banking, to operate efficiently.
“With Pakistan being put into FATF grey list, major international banks like JPMorgan Chase, Citibank and others will deny credit lines, which mean they would not accept a letter of credits (LCs),” Now the opening of LCs would be comparatively challenging.
Earlier, as EurAsian Times reported, Pakistan was placed on FATF Grey List, and it is believed that besides US and India, key Pakistani allies, China and Saudi Arabia, also backed the move.