Pakistan will continue to be on the "Grey List" of countries under increased monitoring of the Financial Action Task Force (FATF), a statement from the global money laundering and terrorist financing watchdog said on Friday.

The watchdog said the country may be removed from the list after an on-site visit to verify the implementation of Pakistan's reform on countering terror financing mechanisms.

"At its June 2022 Plenary, the FATF made the initial determination that Pakistan has substantially completed its two action plans, covering 34 items, and warrants an on-site visit to verify that the implementation of Pakistan's AML/CFT reforms has begun and is being sustained and that the necessary political commitment remains in place to sustain implementation and improvement in the future," it said.

Inclusion in the 'Grey List' implies "strategic deficiencies" detected in a jurisdiction's policies to prevent money laundering and terror financing, according to an IMF working paper.

This makes it difficult for a country to get financial aid from world bodies like the International Monetary Fund (IMF).

Not as severe as black-listing, the inclusion in the 'Grey List' shows that it is working to remove the deficiencies that have been flagged.

The FATF is a global body which focuses on "setting standards and promoting effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system".