What is FATF: The Financial Action Task Force (FATF) is a policy making body for the global money laundering and terrorist financing. This inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. FATF develops recommendations for countries to prevent organized crime, corruption and terrorism.
Why it matters: FATF as a global watchdog helps different countries (especially third world countries) to increase transparency of their financial system (making it easier to detect criminal activity) and give the capacity to successfully take action against money laundering and terrorist financiers.
What is at stake here: FATF assigns countries in three different types of list; White, Grey and Black.
So far, only two countries have been blacklisted, they are Iran and North Korean
What about Pakistan: In June, 2018 Pakistan was listed in the Grey list because of extensive money laundering. To clear this position Pakistan took severe measures like arresting a major terrorist organization Lashkar-e-Taiba’s leader Hafiz Saeed (yes, the person responsible for the Mumbai attack in 2008).
On the brighter side we have compelled 21 recommendations out of 27 but with lack of support in the international community, Pakistan is at verge of entering the blacklist.
What if Pakistan got blacklisted: It is a long debate but if we have to explain it in simple word(s), those will be; high rate inflation, more poverty, unmanageable corruption and lost of support from the international community.
Update: European Union has opposed Pakistan’s exit from the Grey list as the EU believes that Pakistan is not putting required effort into eliminating illegal money flow.