Pakistan will have to make further legislation on at least two counts to meet three outstanding benchmarks of the 27-point action plan of the global money laundering and terrorist financing watchdog FATF before the new June deadline, a media report said on Tuesday.

The Paris-based Financial Action Task Force (FATF) placed Pakistan on the grey list in June 2018 and asked Islamabad to implement a plan of action to curb money laundering and terror financing by the end of 2019 but the deadline was extended later on due to COVID-19 pandemic. The new deadline was set by the FATF last month.

Pakistan has been scrambling in recent months to avoid being added to a list of countries deemed non-compliant with anti-money laundering and terrorist financing regulations by the FATF, a measure that officials here fear could further hurt its ailing economy.

The Dawn newspaper reported that the government will have to submit an updated report within a month to the FATF on the progress on legislation and other steps to be taken to address the outstanding concerns.

Since the government had changed almost three dozen laws over the past year to meet the FATF requirements, there should not be any hurdle in the way of making two more amendments, the report said.

Presiding over a meeting of the National Executive Committee (NEC) on Anti-Money Laundering, Finance Minister Abdul Hafeez Shaikh asked the Financial Monitoring Unit (FMU) and chairman of the FATF Coordination Committee and Industries and Production Minister Hammad Azhar to immediately finalise the timelines for additional legislation in consultation with agencies of the federal government and the armed forces.

The deadlines should be reasonable to be shared with the FATF and all agencies and stakeholders should act in close coordination to meet the deadlines well in advance, the report said.

It was observed that Pakistan had made progress over the past two years and was being appreciated by the international community, but at the same time it did not send a good message when international commitments and deadlines were missed repeatedly, it said.

The NEC was informed that Pakistan had to update the Paris-based global watchdog on financial crimes on the way forward and its timelines on the basis of observations of FATF plenary and shortcomings pointed out by the FATF assessors within 30 days.

The additional legislation has to cover some weaknesses in the existing framework that limited the authorities from taking action, including imposing sanction or apprehending those acting for or on behalf of designated terrorist entities or individuals and prosecuting targeted persons and entities or those working for them, within certain deadlines.

The three outstanding action points include demonstrating that Terrorism Financing (TF) investigations and prosecutions target persons and entities acting on behalf or at the direction of the designated persons or entities and demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions.

Thirdly, Pakistan has to demonstrate effective implementation of targeted financial sanctions against all designated terrorists, specifically those acting for or on their behalf, the report said.

An official statement said FMU Director General Lubna Malik briefed the committee on the overall progress achieved on the FATF action plan and outlined efforts under the way for the remaining targets to be achieved in due course of time.

She said Pakistan had received support for making strides vis-à-vis an exigent action plan given by the FATF.

Sources said the meeting was also informed that reasonable progress had already been achieved on one out of three remaining points, but two areas that required additional legislation would be time-consuming.

Acknowledging the progress demonstrated by the relevant stakeholders, finance minister Shaikh called for expediting efforts to fulfil the requirements in the remaining areas.

"The strict adherence to timelines would culminate into the successful completion of the FATF action plan," he said.

In February last year, the FATF gave Pakistan, which missed 13 targets, a four-month grace period to complete its 27-point action plan against ML&TF committed with the international community.

In its third plenary held virtually in June, the FATF decided to keep Pakistan in the grey list as Islamabad failed to check the flow of money to terror groups like Lashkar-e-Taiba (LeT) and Jaish-e-Mohammed (JeM).

With Pakistan's continuation in the 'grey list', it is increasingly becoming difficult for the country to get financial aid from the International Monetary Fund (IMF), World Bank, Asian Development Bank (ADB) and the European Union, thus further enhancing problems for the nation which is in a precarious financial situation.

If the FATF in its meeting finds that Pakistan has failed to meet its requirements, there is every possibility that the global body may put the country on the 'Black List' along with North Korea and Iran.

The FATF is an inter-governmental body established in 1989 to combat money laundering, terrorist financing, and other related threats to the integrity of the international financial system.