The Financial Action Task Force (FATF) is set to present a preliminary report on Pakistan's progress on the implementation of the 27-point action plan at its plenary meet which began on Monday.

The report has been prepared by the Paris-based FATF's International Cooperation Review Group (ICRG), which includes the US, the UK, France, China and India.

But what is the FATF? And why has Pakistan been struggling to get out of its 'Grey List'?

Here's what you need to know about it:

What Is The FATF?

The FATF is a global watchdog for money laundering and terror financing.

As per its website: "The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas."

The organisation was established by the G-7 Summit that was held in Paris in 1989 in response to mounting concern over money laundering.

The G-7 Heads of State or Government and President of the European Commission convened the Task Force from the G-7 member States, the European Commission and eight other countries after recognising the threat posed to the banking system and to financial institutions.

Originally comprising 16 members, the FATF expanded its membership to 28 members by 1992. By 2,000 it had 31 members and has since expanded to 39 members.

The FATF Plenary, it's decision-making body, meets thrice a year.

What's The Significance of 'Grey List' And 'Black List'

First, the terms 'Grey List' and 'Black List' don't officially exist in FATF parlance. Instead, you have "Jurisdictions Under Increased Monitoring" and "High-Risk Jurisdictions subject to a Call for Action". The FATF places a country on the 'Grey List' as a final warning to get it to comply with its directives.

Think of it as a yellow card.

If a country still refuses to comply, it will be blacklisted by the organisation or be put on the 'Black List'.

Nineteen countries including Pakistan have been placed on the FATF 'Grey List', while only two countries have been placed on the 'Black List': Iran and North Korea.

Why Pakistan Is Struggling To Get Out of Its 'Grey List?'

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

With Pakistan's continuation in the 'Grey List', it will be difficult for the country to get financial aid from the IMF, the World Bank, the ADB and the European Union, thus further enhancing problems for the nation which is in a precarious financial situation.

Over the past 12 years, Pakistan has been placed on the 'Grey List' thrice.

Most recently in June 2018, when the FATF urged Islamabad to implement a 27-point action plan to curb money laundering and terror financing by the end of 2019. However, the deadline was extended due to the coronavirus pandemic.

In February, the FATF gave a fourth extension to Pakistan to fully implement a 27-point action plan and "strongly urged" it to meet the remaining three conditions about terror financing investigations and the United Nations Security Council resolutions.

Pakistan would remain on the grey list till June 2021, a statement issued by the FATF from Paris had said.

What Are Pakistan's Chances of Exiting 'Grey List?'

As per PTI, The Express Tribune quoted sources in the Ministry of Finance as saying that Pakistan's progress was reviewed at a virtual meeting of the ICRG by international observers on Tuesday.

According to the sources, Pakistan has implemented 26 of the 27-point FATF action plan. "There is partial progress on the point of conviction. Relevant laws have been amended. Therefore, it is hoped that there will be good news for Pakistan at the FATF''s Plenary Session starting from 21 to 25 June," the report said on Monday.

However, sources said that in view of the US withdrawal from Afghanistan, Pakistan is likely to remain on the grey list as it would require two to three more months to implement the remaining one point.

"But in terms of performance, Pakistan is very optimistic that it will get good news from the FATF," the report said.

According to the report, the situation is likely to change further by September when the US withdraws its troops from Afghanistan and due to Pakistan's best strategy, the influence of the FATF is expected to be diminished.

Until this last meeting, Pakistan had implemented 24 points.