The Financial Action Task Force (FATF) has decided to maintain Pakistan's status on its 'grey list' of countries with inadequate control over curbing money laundering and terrorism financing until June, when the next review will take place, a statement issued by the Finance Division said on Friday.

"FATF members agreed to maintain Pakistan’s status on FATF’s Compliance Document, normally referred [to] as the Grey List," the press release issued after the conclusion of the six-day FATF plenary meeting in Paris said.

The Finance Division pointed out that during the last reporting period, Pakistan made "significant progress" in the implementation of the 27-point FATF Action Plan, which was demonstrated by the completion of nine additional action items.

"FATF reviewed progress made by Pakistan towards implementation of the Action Plan. While acknowledging the steps taken by Pakistan towards implementation of [the plan] and welcoming its high-level political commitment, FATF highlighted the need for further actions for completing the Action Plan by June 2020," the handout said.

It emphasised that the government "stands committed for taking all necessary action" in order to complete the remaining items in the action plan and that a strategy in this regard has been formulated and is being implemented.

The FATF in its statement issued after the Paris meeting said it "strongly urges" Pakistan to "swiftly complete" its full action plan by June 2020.

“Otherwise, should significant and sustainable progress especially in prosecuting and penalising TF (terror financing) not be made by the next Plenary, the FATF will take action,” it added.

It said such action could include calling on its members to order their financial institutions to give particularly rigorous attention to business relations and transactions with Pakistani clients.

While noting that all deadlines in Pakistan's action plan have expired, the FATF expressed concern over "Pakistan’s failure to complete its action plan in line with the agreed timelines and in light of the TF risks emanating from the jurisdiction".

The watchdog did take into account recent "notable improvements" made by Pakistan, saying the country has, to date, "largely addressed" 14 out of 27 action items, with varying levels of progress made on the rest of the action plan.

With a minimum of three votes by FATF members needed to avoid the organisation's blacklist, Pakistan has been able to avoid punishment so far thanks to support from China and other friendly countries including Malaysia and Turkey.

The watchdog will undertake the next review of Pakistan’s progress in June.

Pakistan is already finalising major amendments to at least a dozen of its laws to meet the FATF requirements by June. Targets have been set for further legislation to upgrade about 12-13 laws and subordinate legislation to complete the overall legal framework in line with the FATF standards.

China lauds Pakistan's efforts
Earlier, the Chinese foreign ministry had said that a majority of FATF members had recognised Pakistan's efforts to improve its counter-terrorism financing (CTF) regime at the financial watchdog's latest plenary meeting.

"It was decided at the meeting that Pakistan will be allowed more time to continue implementing its action plan," said Chinese foreign ministry spokesman Geng Shuang at a news briefing in Beijing.

The statement by the Chinese government came hours ahead of the FATF decision regarding Pakistan's fate on the watchdog's grey list.

Asked to comment on Indian media reports that China had changed its position at FATF to no longer support Pakistan, Geng said: "China's position on the relevant issue remains unchanged.

"China maintains that the purpose and aim of the FATF is to support countries' efforts to strengthen institutions against money laundering and terror financing and safeguard the international financing system. We stand ready to work with relevant parties to offer more assistance to Pakistan in this area."

The Chinese foreign ministry echoed similar views through a tweet, noting that "Pakistan has made enormous efforts in improving its CTF regime, which has been recognised by the majority of FATF members at the latest plenary meeting in Paris. China & other countries will continue offering assistance to Pakistan in this area."

Also on Friday, Adviser to the Prime Minister on Finance Dr Abdul Hafeez Sheikh in a meeting with Chinese Ambassador to Pakistan Yao Jing thanked the Chinese government for "their massive support in the FATF meetings", a statement issued by the Finance Division said.

"China and other brotherly countries have supported Pakistan throughout the [FATF] process in terms of guiding the country to improve its frameworks," the press release quoted the adviser as saying.

The FATF plenary and working group meetings started in Paris, France on Monday and concluded today. A delegation headed by Federal Minister for Economic Affairs Hammad Azhar represented Pakistan at the meetings.