FATF 'grey list' poses credit risks to Pakistani banks: Moody's.

KARACHI -- Pakistan's banking system faces credit risk from the country's continued inclusion on the Financial Action Task Force's (FATF) 'grey list' of nations, international rating agency Moody's said in a credit outlook article on Thursday. On February 21, the FATF, an international financial watchdog that sets global money-laundering rules, announced that Pakistan would remain, along with 17 other countries, on its list of jurisdiction under increased monitoring, or the 'grey list' for not fully completing the FATF-mandated action plan. Pakistan, which has been on the list since June 2018, will now remain on the list until June 2020, when the next evaluation takes place.

'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. Banks' profitability risks are being constrained as a result of...