The Financial Action Task Force (FATF) has formally announced that Pakistan will remain on its grey list for the next four months, offering a lifeline after acknowledging recent improvements. Ministry of Finance has reaffirmed its commitment to fully implement the Action Plan. While noting recent improvements, FATF has asked Pakistan to swiftly complete its action plan by February 2020. Out of 27 recommendations given to Pakistan the country has largely complied on 5, while the remaining are on varying levels. FATF decision is likely to restore investors’ confidence and help Pakistan in improving dollar inflows through Carry trades, Eurobonds and Privatization. International Monetary fund (IMF) has also kept FATF issue as a structural benchmark with timeline ending October 2019, whereby Pakistan’s AML/CFT was supposed to be strengthened. To recall, Pakistan is a member of the APG since 2000. APG is a regional body of Financial Action Task Force (FATF) and requires its members to undergo mutual evaluation on the compliance of its anti-money laundering and countering financing of terrorism (AML/CFT) framework in the light of FATF recommendations. Pakistan completed its first ML and TF National Risk Assessment (NRA) in 2017 and assigns a national risk-rating of ‘medium’ for both ML and TF. However, the NRA lacks a comprehensive analysis of threats and vulnerabilities, and is narrow in scope with gaps in key risk areas. The ‘Blacklist’ status of Pakistan would have serious implications like 1) downgrading of the overall financial system, 2) impacting trade volumes through ‘Non Tariff Barriers’ and 3) increasing country’s risk premium.