ISLAMABAD: Pakistan’s banking system faces credit risk from the country’s continued inclusion on an international “grey list” of nations falling short of global money-laundering rules, rating agency Moody’s said on Thursday.
Global watchdog Financial Action Task Force (FATF) said last week that Pakistan would remain on the list, expressing concern it had not completed an agreed-upon action plan, and giving it until June to do so.
“The announcement is credit negative for Pakistani banks because it raises questions about potential additional restrictions relating to banks’ foreign-currency clearing services, as well as their foreign operations,” Moody’s said, adding that increased compliance costs would also hamper banks’ profitability.
Though Pakistan’s compliance with global rules had improved, Moody’s said, its weakness risked banks losing access to foreign currency-clearing services, crucial for cross-border payments used to fund imports and exports.
“This risk has so far not crystallized in the jurisdictions that have been placed on the increased monitoring list,” the agency said.
If Pakistan does not meet FATF’s requirements to curb any chances of the financial system to be used for terror financing or money laundering, it could join Iran and North Korea on the global watchdog’s blacklist.
That would lead to Pakistan being shunned by international financial institutions.
The UAE’s central bank announced this month that it was investigating whether Pakistan’s largest lender Habib Bank had violated laws against money laundering and terrorism financing.
Pakistan’s inclusion on ‘grey list’ is credit negative for banks — Moody’s
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Pakistan’s inclusion on ‘grey list’ is credit negative for banks — Moody’s
- Pakistan’s compliance with global rules had improved, Moody’s said
- FATF said last week that Pakistan would remain on the list, expressing concern it had not completed an agreed-upon action plan
Tens of thousands flee northwest Pakistan over fears of military operation
- More than 70,000 people, mostly women and children, have fled remote Tirah region bordering Afghanistan
- Government says no military operation underway or planned in Tirah, a town in Khyber Pakhtunkhwa province
BARA, Pakistan: More than 70,000 people, mostly women and children, have fled a remote region in northwestern Pakistan bordering Afghanistan over uncertainty of a military operation against the Pakistani Taliban, residents and officials said Tuesday.
Pakistan’s Defense Minister Khawaja Mohammad Asif has denied the claim by residents and provincial authorities. He said no military operation was underway or planned in Tirah, a town in Khyber Pakhtunkhwa province.
Speaking at a news conference in Islamabad, he said harsh weather, rather than military action, was driving the migration. His comments came weeks after residents started fleeing Tirah over fears of a possible army operation.
The exodus began a month after mosque loudspeakers urged residents to leave Tirah by Jan. 23 to avoid potential fighting. Last August, Pakistan launched a military operation against Pakistani Taliban in the Bajau r district in the northwest, displacing hundreds of thousands of people.
Shafi Jan, a spokesman for the provincial government in Khyber Pakhtunkhwa, posted on X that he held the federal government responsible for the ordeal of the displaced people, saying authorities in Islamabad were retracting their earlier position about the military operation.
Khyber Pakhtunkhwa Chief Minister Suhail Afridi, whose party is led by imprisoned former Prime Minister Imran Khan, has criticized the military and said his government will not allow troops to launch a full-scale operation in Tirah.
The military says it will continue intelligence-based operations against Pakistani Taliban, who are known as Tehrik-e-Taliban Pakistan, or TTP. Though a separate group, it has been emboldened since the Afghan
Taliban returned to power in 2021. Authorities say many TTP leaders and fighters have found sanctuary in Afghanistan and that hundreds of them have crossed into Tirah, often using residents as human shields when militant hideouts are raided.
Caught in the middle are the residents of Tirah, who continued arriving in Bara.
So far, local authorities have registered roughly 10,000 families — about 70,000 people — from Tirah, which has a population of around 150,000, said Talha Rafiq Alam, a local government administrator overseeing the relief effort. He said the registration deadline, originally set for Jan. 23, has been extended to Feb. 5.
He said the displaced would be able to return once the law-and-order situation improves.
Among those arriving in Bara and nearby towns was 35-year-old Zar Badshah, who said he left with his wife and four children after the authorities ordered an evacuation. He said mortar shells had exploded in villages in recent weeks, killing a woman and wounding four children in his village. “Community elders told us to leave. They instructed us to evacuate to safer places,” he said.
At a government school in Bara, hundreds of displaced lined up outside registration centers, waiting to be enrolled to receive government assistance. Many complained the process was slow.
Narendra Singh, 27, said members of the minority Sikh community also fled Tirah after food shortages worsened, exacerbated by heavy snowfall and uncertain security.
“There was a severe shortage of food items in Tirah, and that forced us to leave,” he said.
Tirah gained national attention in September, after an explosion at a compound allegedly used to store bomb-making materials killed at least 24 people. Authorities said most of the dead were militants linked to the TTP, though local leaders disputed that account, saying civilians, including women and children, were among the dead.
