Pakistan has been placed on Financial Action Task Force (FATF)’s grey list. The decision had been taken earlier in the February 2018 meeting of the 37-member FATF, the global watchdog of illicit financing. The formal notification to this effect came last weekend, after Pakistan negotiated a 26-point action plan to meet its Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) obligations with the FATF in its plenary meeting in Paris.
India has welcomed the decision to place Pakistan in the Compliance Document (Grey list) for monitoring. India further hopes that credible measures would be taken by Pakistan to address global concerns related to terrorism emanating from any territory under its control.”
Pakistan has been put on the list because of inadequate monitoring and regulatory mechanisms, low conviction rate on unlawful transactions, poor implementation of United Nations Security Council (UNSC) resolutions 1267 and 1373, and cross-border illicit movement of currency by terrorist groups.
FATF says it would continue to work with Pakistan and monitor implementation closely. Pakistan has committed itself to implementing its action-plan within 15 months.
Failure to offer such commitment could have pushed Pakistan into the black list of FATF, in the company of Iran and North Korea. The plan, it is reported, has been blessed by the military in the June 9 National Security Meeting in Islamabad.
This is not the first time that Pakistan has been listed by FATF for its non-serious approach to AML/CFT. Pakistan was on the FATF ‘black list’ during 2008-10 and on its ‘grey list’ during 2012-15. Based on its commitment to plug the holes in its AML/CFT regulations, it was delisted in 2015. However, because of violations of its commitments, in November 2017, the FATF International Cooperation Review Group in Argentina adopted a resolution calling attention to Pakistan’s support to Jamaat-ud-Dawa (JuD) and its affiliates, Falah-i-Insaniat Foundation (FiF), Lashkar-e-Taiba (LeT); Jaish-e-Muhammad (JeM), the Haqqani Network and the Afghan Taliban.
Pakistan tried to explainits position in its reports to FATF in January and early February 2018. However, unconvinced, in the February-2018 FATF plenary, the US, supported by UK, France and Germany initiated a proposal to nominate Pakistan as a country having “strategic deficiencies” in AML/CFT. Initially, the move was countered by China, Turkey and Saudi Arabia. Undeterred, the US pushed for a second discussion. China and Saudi Arabia opted out leaving Turkey alone in its defence of Pakistan. Without three members required for stalling the move, the FATF discussions took serious notice of Pakistani deficiencies and decided to put it under grey list.
Officially, Pakistan has not pressed the panic button yet. The standard line is that Pakistan will cooperate fully with FATF and take necessary measures to get out of the grey list soon. There is a popular view that it is a move designed by the US and India to politically embarrass Pakistan. It will not hurt Pakistan financially. Saner commentators are writing nonetheless that “Pakistan is drifting towards international isolation due to its policy of using groups designated by the world community as terrorist outfits as instruments of foreign policy”, despite the civilian government’s warning to the military to rein in the good terrorists (read LeT, JeM).
Islamabad’s commitments, however, does not reflect in its policies. In the backdrop of the FATF listing, Pakistan decided to lift the ban on the sectarian outfit, Ahle-Sunnat Wal-Jamaat (ASWJ). It’s assets were unfrozen and removed travel restriction on its leaders. Many sectarian radicals associated with notorious outfits are being encouraged to contest the upcoming parliamentary and assembly elections.
Busy in rehabilitating the terror groups politically, to take them off the FATF’s radar, Pakistan will try its best to dodge FATF’s watchful eyes. It will take concerted pressure on Islamabad to force it to act against terror elements it considers its ‘assets’.
Script: Dr. Ashok Behuria, Coordinator South Asia Centre & Senior Fellow IDSA