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(Update 5 days ago)

KARACHI, Pakistan (Reuters) - Global money laundering watchdog the Financial Action Task Force (FATF) on Thursday said it would keep Pakistan on its terrorism financing “grey list”.

FATF had placed Pakistan on its “grey list” of countries with inadequate controls over terrorism financing in 2018, which made foreign firms more cautious about investing in Pakistan.

In an online press briefing from Paris, FATF President Marcus Pleyer said Islamabad had made “significant progress” but there remained “serious deficiencies” in mechanisms to plug money laundering and terrorism financing.

Pleyer said three out of 27 action points still needed work.

Following the announcement, Pakistan said it was committed to complying with the FATF evaluation process.

“It was also noted by FATF member countries that Pakistan is subject to perhaps the most challenging and comprehensive action plan ever given to any country,” Pakistani federal minister Hammad Azhar wrote on Twitter.

Azhar, who leads Pakistan’s effort to implement the FATF roadmap, said the country was “subject to dual evaluation processes of FATF with differing time lines”.

Last year, Azhar said that FATF acknowledged that any blacklisting, meaning further downgrading of the country’s status, is off the table now.

However, replying to a question, Pleyer said on Thursday that the risk of Pakistan being put on the blacklist had not gone, and that the country must continue to work on outstanding action points to fix its financial monitoring mechanisms.

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