Pakistan: Shades Of ‘Grey’ – Analysis
By Ajit Kumar Singh*
Marcus Pleyer, the Financial Action Task Force (FATF) President, at a virtual press conference held on October 23, 2020, after the three-day (October 21-23) virtual Plenary meet, declared, “Pakistan remains on our increased monitoring list [Jurisdictions under Increased Monitoring], the so-called gray list.” He stated that FATF would consider sending its team for an “on-site visit” to Pakistan, once it completes all 27 items of its action plan, to review progress and determine whether to remove the country from the ‘grey-list’ or not. He, however, pointed out, that there was “another process going on in the Asian Pacific Group [APG]” where Pakistan’s case is being evaluated.
When asked if Pakistan still faces the risk of being moved to the FATF’s High-Risk Jurisdictions or ‘black-list’, he stated that though Pakistan has “now completed 21 of 27 items of its action plan… the six outstanding items are very serious deficiencies that still have to be repaired” and Pakistan consequently still faced the risk of being moved to the ‘black-list’.
Meanwhile, in a release on October 23, 2020, FATF, stated, that “as all action plan deadlines have expired, the FATF strongly urges Pakistan to swiftly complete its full action plan by February 2021”. In the release it asked Pakistan to
…continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) demonstrating that law enforcement agencies are identifying and investigating the widest range of TF [terrorist financing] activity and that TF investigations and prosecutions target designated persons and entities, and those 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; (3) demonstrating effective implementation of targeted financial sanctions against all 1267 and 1373 designated terrorists and those acting for or on their behalf, preventing the raising and moving of funds including in relation to NPOs [Non-Profit Organisations], identifying and freezing assets (movable and immovable), and prohibiting access to funds and financial services; and (4) demonstrating enforcement against TFS [Targeted Financial Sanctions] violations, including in relation to NPOs, of administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases.
Earlier, on September 30, 2020, the APG released its 1st Follow Up Report (FUR) on Pakistan’s Mutual Evaluation Report (MER) adopted in October 2019. According to the FUR, out of 40 FATF recommendations, Pakistan was found non-complaint on four recommendations, partially complaint on 25, largely compliant on nine, and compliant on only two recommendations. There are four possible levels of technical compliance: compliant, largely compliant, partially compliant and non-compliant.
The Report at the end concluded,
The Pakistan FUR was adopted out-of-session by the APG membership in August 2020. In keeping with APG third round procedures, Pakistan will remain in enhanced (expedited) follow-up, and will continue to report back to the APG on progress to strengthen its implementation of AML/CFT [Anti-Money Laundering and Countering the Financing of Terrorism] measures.
There are three categories of follow-up based on mutual evaluation reports: regular, enhanced and enhanced (expedited).
In the MER 2019, which provides a summary of the AML/CFT measures in place in Pakistan at the date of the on-site visit in October 2018 (October 8 to 19), Pakistan was found non-complaint on four recommendations, partially complaint on 26, largely compliant on nine, and compliant on only one recommendation.
In the meantime, Pakistan made several last-minute attempts to come out of the ‘grey-list’. A total of eight Bills were passed to meet the FATF demand. These include: the Islamabad Capital Territory Waqf Properties Bill, 2020; the Anti-Money Laundering (Second Amendment) Bill, 2020; and the Anti-Terrorism (Third Amendment) Bill 2020; on September 16, 2020; the Limited Liability Partnership (Amendment) Bill 2020 and the Companies (Amendment) Bill 2020, on August 20, 2020; the Mutual Legal Assistance (Criminal Matter) Bill, 2020, on August 6, 2020; the United Nations Security Council Amendment Bill, 2020 and the Anti-Terrorism Act Amendment Bill, 2020, on July 30. Pakistan Foreign Minister Shah Mehmood Qureshi on July 26, 2020, had said that that the Government has prepared eight bills for legislation on anti-money laundering and terror financing with a view for Islamabad to move out from the FATF’s ‘grey-list’.
On September 16, Federal Law Minister Farogh Naseem confirmed that Pakistan had “completed all FATF-related legislation before the deadline… There were no more amendments required for now.” He added that Pakistan would pass new laws or further amend the existing ones if required in future.
Further, the Parliament was informed on September 16 that the Provincial Home Departments have frozen the 964 properties of proscribed organizations under United Nations Security Council (Freezing and Seizure) Order, 2019, issued by the Ministry of Foreign Affairs. These included a total of 611 properties of the Jamaat-ud-Dawa (JuD)/Falah-e-Insaniyat Foundation (FIF) and eight of Jaish-e-Mohammed (JeM) in Punjab; 108 of JuD/FIF and 29 of JeM in Khyber Pakhtunkhwa; 80 of JuD/FIF and three of JeM in Sindh and 30 of JUD/FIF and one of JeM in Balochistan; 17 of JuD/FIF and four of JeM in Islamabad Capital Territory; and 61 of JuD/FIF and 12 of JeM in Pakistan occupied Jammu and Kashmir.
On August 18, 2020, Pakistan’s Ministry of Foreign Affairs issued two Statutory Regulatory Orders to enforce UN Security Council sanctions against hundreds of terrorists, including those of the Lashkar-e-Taiba (LeT), JeM, Al-Qaeda, Taliban, Haqqani Network and Islamic State, as well as 93 terrorist groups and entities. The First Statutory Regulatory order listed 88 entities, including terrorist groups. It also included JuD chief Hafiz Saeed, JeM chief Masood Azhar, and Dawood Ibrahim in their individual capacities. The second notification listed prominent Taliban and Haqqani Network leaders such as Mullah Abdul Ghani Baradar, Siraj Haqqani, Bakht Gul and Sher Mohammad Abbas Stanekzai. The two notifications ratified the UN Security’s Council’s call for freezing the assets of the terrorist individuals and terror entities, banning the travel of the terrorist individuals and ensuring that they cannot access any weapons, ammunition and military equipment.
Interestingly, however, a Taliban delegation led by Baradar was invited by Pakistan for talks on August 24, 2020. When it was reported widely that Pakistan has enforced new sanctions, the Foreign Office on August 22, 2020, responded that no new sanctions had been imposed on the individuals and outfits under the two Statutory Regulatory Orders of August 18. The Foreign Office spokesperson, in a clarification argued, “Comprehensive SROs [statutory regulatory orders] are issued from time to time as per routine. Such SROs have been issued in the past to meet global obligations. The last SRO was issued in 2019.” He, however, did not explain why the earlier statutory regulatory orders were not uploaded on the Ministry’s website then, while the August 18, 2020, was uploaded just after its release. Reports indicate that all earlier Statutory Regulatory Orders were uploaded in 2020, clearly establishing the fact that Pakistan is doing all that is possible to formally comply with FATF’s requirements to come out of the ‘grey list’, but is evading any real changes in the freedom of operation it provides to designated terrorist formations and individuals.
Pakistan’s formal compliance is clearly superficial and FATF is rightly of the opinion that Pakistan needs to do much more to deal with “very serious deficiencies”.
While Pakistan has taken strong measures against domestically-oriented terrorist groups such as the Tehrik-e-Taliban Pakistan (TTP), it remains a safe haven for terrorist groupings threatening world peace, particularly groups which are directed against India and Afghanistan in what are essentially Pakistan state-backed proxy wars. These terrorist formations continue to enjoy the open support of the Pakistani establishment.
The Inter Service Intelligence’s (ISI)’s direct and present link with Syed Salahuddin, ‘chairman’ of the United Jehad Council and ‘chief’ of Hizbul Mujahideen, has been further reconfirmed. A letter issued to Salahuddin certifies that he is a bona fide official of the Directorate of Intelligence and is working for the Inter Service Intelligence. The letter suggests that he has been “security cleared” and should not be “unnecessarily stopped”. The certificate is valid up to December 31, 2020.
Acknowledging the threat, William E. Todd, Nominee to be Ambassador to Pakistan, told the Senate Committee on Foreign Relations on September 22, 2020, that “to truly reduce regional tensions, and rebuild a strong relationship with the United States, Pakistan must take sustained and irreversible action against terrorism”. He said that Pakistan has “committed publicly to ensure terrorists cannot use Pakistani territory to operate” and that it “needs to continue that work.”
While Islamabad has failed again to deceive the FATF, it is believed that it will continue with such efforts in future as well. No real transformation on the ground is expected. FATF will, consequently, have to act with far greater determination if it really wishes to end Pakistan’s direct support to and sponsorship of terrorist groups and activities.
*Ajit Kumar Singh
Research Fellow, Institute for Conflict Management