Context-During his two-day visit beginning Tuesday, Doval met Saudi Crown Prince Mohammed bin Salman (MBS) to enlist Riyadh’s support. The FATF plenary session and working group meetings are scheduled to be held from October 13 to 18.

Key highlights

• Saudi Arabia — the first Arab country to become a member of the FATF in June this year — as part of India’s diplomatic offensive strategy to push for blacklisting of Pakistan
• Pakistan, which was put in the greylist last year under the FATF chairmanship of the US, has to meet a series of commitments.
• But, with Pakistan’s all-weather ally China as the current chair of FATF, Delhi has cranked up its diplomatic outreach to the 39 members — 37 countries and two regional organisations (Gulf Cooperation Council and the European Commission).
• Sources said India and Saudi Arabia have been closely cooperating with each other in fighting terrorism, including through exchange of information and intelligence

The Financial Action Task Force (FATF)

• is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions.
•  The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. 
• The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

What is blacklist and grey list?

• FATF maintains two different lists of countries: those that have deficiencies in their AML/CTF regimes, but they commit to an action plan to address these loopholes, and those that do not end up doing enough. The former is commonly known as grey list and latter as blacklist.
• Once a country is blacklisted, FATF calls on other countries to apply enhanced due diligence and counter measures, increasing the cost of doing business with the country and in some cases severing it altogether. As of now there are only two countries in the blacklist — Iran and North Korea — and seven on the grey list, including Pakistan, Sri Lanka, Syria and Yemen.

Pakistan may be blacklisted after poor FATF review

• The Asia-Pacific Joint Group (APJG), which is a sub-group of the FATF, held a review meeting with Pakistani officials on issues of anti-money laundering and combating financing of terrorism (AML/CFT) regimes.
• Sources say Pakistan's evaluation by the APJG in Bangkok this week did not match up to its projections. Of the 27-point action plan of the FATF, Pakistan has cleared only six. It has failed to show compliance in 10 points and 11 are in-process.
• The FATF had had placed Pakistan on its 'grey list' in June 2018, giving the country a 15-month deadline to implement its 27-point action plan which ends in September.
• However, on most of the areas of compliance that had to be implemented from June 2018 to May 2019, the work is still in progress.
• According to FATF, if Pakistan fails to meet the implementation of the 27-point plan, the country could be blacklisted.

Impact of being blacklisted

• Pakistan’s $6 billion loan agreement with the International Monetary Fund (IMF) could be threatened.
• Pakistan faces an estimated annual loss of $10 billion if it stays in the greylist; if blacklisted, its already fragile economy will dealt with a powerful blow.