FATF has arisen as an influential global policy making body against money laundering, terror financing and proliferation of weapons. FATF as an inter-governmental task force enforces its standards with the collaboration of its members. Iran is facing the counter measures imposed by the FATF for the non-compliance of the FATF demands and Pakistan is going through strict observation by the FATF for being on grey list. The counter measures taken by FATF isolates the targeted state from the international financial system and it has impact the ordinary life of the people in socioeconomic terms. The isolation of any sort for any state in this high time of interdependency and globalization diverse impacts. This study has analyzed the socioeconomic spectrum of Iran since its inclusion on FATF blacklist. Pakistan can learn from the case of Iran which due to many reasons delayed the fulfillment of FATF recommendations and ended with call for counter measures against it. Pakistan, as was mentioned by the foreign minister of Pakistan, is confronting the threat of losing ten (10) billion dollars annually if it fails to ensure the exit from the FATF watch list. This study has been carried out employing the qualitative research method of ‘Case Study’ and ‘Document Analysis’ as a data collection technique. Supervisor:- Dr. Iftikhar Ahmad