ASSESSMENTS

Pakistan, Iran and the Financial Fight Against Terrorism

Jul 13, 2018 | 08:00 GMT

The Financial Action Task Force, banking and other financial leaders gather during a May 2017 meeting of G-7 finance ministers in Bari, Italy.

The Financial Action Task Force, banking and other financial leaders gather during a May 2017 meeting of G-7 finance ministers in Bari, Italy. The Paris-based Financial Action Task Force, established to fight money laundering and terrorism, recently declared Pakistan's reform efforts on the matter inadequate while it gave Iran more time to meet its guidelines.

(ALBERTO PIZZOLI/AFP/Getty Images)

Highlights

  • The Financial Action Task Force recently "gray-listed" Pakistan for failing to better combat money laundering and terrorism financing; at the same time, the international organization suspended countermeasures on Iran while Tehran implements reforms.
  • The task force's decision will exacerbate Pakistan's financial risks and increase Islamabad's reliance on China as a lender of last resort.
  • Internal divisions over how far Iran should go to comply with the organization's guidelines will complicate Tehran's pursuit of financial breathing room as Iran faces strong U.S. sanctions.

The Financial Action Task Force is a 37-member intergovernmental organization that focuses on setting global standards for combating money laundering and terrorist financing. Headquartered in Paris, it holds three plenary sessions a year – in February, June and October. During its latest meeting, the FATF added Pakistan to its "gray list" while it continued to suspend countermeasures on Iran....

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