Close Shave for Pakistan; Once Again Escapes to be Blacklisted by FATF

The powerful countries of the world do not want to isolate Pakistan by putting it in the blacklist of Financial Action Task Force, an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat money laundering and terrorism financing

Opinion

By Jai Kumar Verma

Generally, the countries which fall in ‘grey list’ try hard to come out of it, however, Pakistan which has fallen thrice in the ‘grey list’ tries not to be downgraded to ‘blacklist’ but makes no sincere efforts to come out from ’grey list’ of Financial Action Task Force (FATF). In fact, in June 2020 when Islamabad escaped from joining Iran and North Korea in blacklist, Pakistan’s Foreign Minister Shah Mehmood Qureshi happily mentioned that although India tried but it was unsuccessful in downgrading Pakistan into ‘black list’. Qureshi had no remorse that Pakistan could not come out from ‘grey list’ and Islamabad continued funding of several terrorist outfits including Al Qaeda, Lashkar-e-Taiba (L-e-T), Jaish-e-Mohammed (JeM), Taliban and others which are designated terrorist outfits by United Nations Security Council (UNSC). The FATF and other international organisations also requested Pakistan to prosecute leaders of the terrorist outfits, but its efforts lacked genuineness.

The FATF, which is the global money laundering and terrorist financing watchdog, in its final meeting on February 25 retained Pakistan in ‘grey list’. This decision of FATF will harm Pakistan financially as it will not get financial assistance from the international organisations including International Monetary Fund (IMF). Pakistan is passing from a grave economic crisis and its public debt at the end of 2019-2020 rose to 87 per cent of GDP and the external debt and liabilities became US$113.8 billion.

The FATF chalked out a 27-points action plan for Pakistan but it could make progress only in 24 out of 27 points and failed to address the critical three points. Now FATF will again decide the fate of Pakistan in its meeting scheduled to be held in June 2021. FATF issued a statement which mentioned that “To date, Pakistan has made progress across all action plan items and has now largely addressed 24 of the 27 action items. As all action plan deadlines have expired, the FATF strongly urges Pakistan to swiftly complete its full action plan before June 2021.”

The FATF kept Pakistan in grey list in June 2018 and warned Pakistan to implement all 27 points of the action plan. Now the FATF will meet again in June 2021 and if it fulfils all 27 stipulations and member states are satisfied then it will be out of grey list and will come in white list. The FATF President Dr Marcus Pleyer stated that the Asia-Pacific Group on Money Laundering (APG) is also watching Pakistan and will also decide its implementation of terror financing restrictions.

The FATF, which is the global money laundering and terrorist financing watchdog, in its final meeting on February 25 retained Pakistan in ‘grey list’. This decision of FATF will harm Pakistan financially as it will not get financial assistance from the international organisations including IMF

Pleyer also mentioned that “As long as we see that the country is progressing with action items, and we have seen progress with Pakistan, we give them a chance to repair the outstanding issues. But we don’t do this forever.” The FATF president also said that no country is allowed to remain in grey list all the time and it will be downgraded to black list if it does not improve. At present only Iran and North Korea are in black list.

Pakistan failed to comply the instructions pertaining to terror financing and the terror financiers were not prosecuted. The country was also unsuccessful in implementing financial sanctions against the UN designated terrorists. As Pakistan has launched a low intensity war against India and continuously infiltrating terrorists in the country, India provided evidence to FATF about Pakistan’s financial assistance to several terrorist outfits. India also mentioned that Pakistan had not taken any worthwhile action against UN designated terrorists including Dawood Ibrahim, Masood Azhar, Zakiur Rehman Lakhvi just to name a few.

In August 2020, Pakistan government issued two notifications in which names and other details of 88 terrorists including Dawood Ibrahim, Hafiz Saeed and Masood Azhar were mentioned. The notifications also mentioned about the details of terrorists of Islamic State and al Qaeda. Although later on Pakistan backtracked and refused to accept the presence of Dawood Ibrahim in the country.

Pakistan is losing lot of money because the country is in grey list. According to a think tank based in Islamabad, the country lost about US$38 billion because it is continuously kept in grey list from June 2018. The country is receiving less foreign direct investment (FDI) and the exports are also suffering.

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A demonstration was held in front of FATF headquarters in Paris on February 23. The demonstrators mentioned that Pakistan is financing the terrorist outfits and assisting terrorists hence it should be downgraded to blacklist. The demonstrators also claimed that Pakistani courts have released Omar Sheikh who is a terrorist and responsible for the killing of Daniel Pearl. It indicates that the judiciary is under pressure.

The FATF president also said that no country is allowed to remain in grey list all the time and it will be downgraded to black list if it does not improve. At present only Iran and North Korea are in black list

The FATF website also mentioned that “Pakistan should continue to work on implementing the three remaining items in its action plan to address its strategically important deficiencies, namely: (1) demonstrating that TF (Terror Finance) investigations and prosecutions target persons and entities acting on behalf or at the direction of the designated persons or entities; (2) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions; and (3) demonstrating effective implementation of targeted financial sanctions against all 1267 and 1373 designated terrorists, specifically those acting for or on their behalf.”

Muhammad Hammad Azhar, Pakistan’s Federal Minister, stated that the country has fulfilled about 90 per cent of FATF’s action plan as 24 out of 27 points are more or less complete while remaining three points are also ‘partially addressed.’ He also tweeted that FATF has acknowledged Pakistan’s high-level political commitment since 2018 that led to significant progress. 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.”

Meanwhile, FATF included Burkina Faso, Cayman Islands, Morocco, and Senegal in the grey list, which has swelled to 19 countries.

In reality Pakistan has a ‘hybrid regime’ where overtly the civilian government rules the country but in reality, the power lies with the army. Pakistan army has propagated that there is danger from India and the army can save the country. Secondly it also claims that in 1971 Pakistan was disintegrated because of India hence it must take revenge by splitting India, hence on one hand Muslim majority Kashmir has to merge in Pakistan and on the other hand a new state Khalistan has to be created. Chinese intelligence agency Ministry of State Security (MSS) also presses Pakistan to carry out terrorist activities in India.

Pakistan watchers feel that country is not making sincere efforts to come out from ‘grey list’ however as it has support of three countries i.e., China, Turkey, and Malaysia it cannot be downgraded to black list. It appears that Pakistan will not discontinue assisting terrorist outfits in near future as ‘proxy war’ against India is part of its foreign policy

Pakistan watchers feel that country is not making sincere efforts to come out from ‘grey list’ however as it has support of three countries i.e., China, Turkey, and Malaysia it cannot be downgraded to black list. It appears that Pakistan will not discontinue assisting terrorist outfits in near future as ‘proxy war’ against India is part of its foreign policy. Pakistan also understands that the important countries of the world do not want to put it in ‘black list’ hence stringent banking and international financial sanctions would not be imposed. The United States and other Western countries feel that Pakistan should not be isolated but should be amended through persuasion.

The Muslim countries like Turkey, Malaysia, Saudi Arabia, and UAE are also against putting a Sunni Muslim country into ‘black list’. Hence the chances that Pakistan is downgraded to ‘black list’ is remote and as it is not feasible to keep any country in ‘grey list’ for a long time hence it may be possible that FATF under some flimsy ground take out Pakistan from ‘grey list’ and put it on ‘white list’. It is the reason that although it is evident that Pakistan is abetting terrorist outfits and not curbing their terrorist activities it is not downgraded to ‘black list’.

-The writer is a New Delhi-based strategic analyst and a retired senior intelligence officer. He is also member of USI and MP-IDSA. The views in the article are solely of the writer and do not necessarily reflect the views of Raksha Anirveda

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