Islamabad: Pakistan must take strict measures, including action against banned outfits by May, to avoid economic sanctions over the non-implementation of Financial Action Task Force (FATF) recommendations, the finance secretary has warned.

Last year, the Paris-based FATF, an international terror financing watchdog, finalised a report with 40 recommendations for de-listing Islamabad from its 'grey list'. Pakistan was placed on the list for failing to curb anti-terror financing.

Arif Ahmed Khan was talking to reporters after attending a meeting of a sub-committee of the Public Accounts Committee (PAC) on Tuesday. Dawn reported that he said "the country had to proceed against the banned outfits in the light of FATF recommendations.

Khan expressed apprehensions that Pakistan might face economic sanctions if the FATF recommendations were ignored and not implemented. The finance secretary said Pakistan had to take strict measures to implement the FATF recommendations.

The International Cooperation Review Group (ICRG) of the FATF that reviewed Pakistan's action plan in recent meetings was not satisfied with the progress on milestones set for January 2019. This was despite "improvements" in the anti-money laundering and combating the financing of terrorism (AML/CFT) regime and integrated database for currency declaration arrangements, the report said.

It expressed concern over Pakistani authorities inability to demonstrate why they considered eight proscribed entities to be low risk as opposed to the high-risk view of the Asia Pacific Group (APG) and the ICRG.

Therefore, the FATF urged "Pakistan to swiftly complete its action plan, particularly those with timelines of May 2019" to address strategic deficiencies, the report said. The FATF will undertake the next review of Pakistan's progress in June 2019, which will be preceded by a face-to-face meeting with the Joint Group in May.

In June 2018, Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its AML/CFT regime and to address its strategic counterterrorism financing-related deficiencies by implementing an action plan to accomplish these objectives.

The successful implementation of the action plan and its physical verification by the APG will lead the FATF to clear Pakistan out of its 'grey list' or move it into the 'blacklist' by September. The FATF blacklist means the country concerned is "non-cooperative" in the global fight against money laundering and terrorist financing. If the FATF blacklists Pakistan, it may lead to downgrading of the country by multilateral lenders like the IMF, World Bank, ADB, EU and also a reduction in risk rating by Moodys, S&P and Fitch.

Pakistan has been put on the grey list of the anti-terror finance watchdog in July 2018. The FATF currently has 35 members and two regional organisations, European Commission and Gulf Cooperation Council. North Korea and Iran are in the FATF blacklist.