By J K Verma*
A plenary meeting of the Financial Action Task Force (FATF), the global money laundering and terror financing watchdog, was held at Orlando, Florida, from June 16-21, 2019. The FATF, meeting reviewed the compliance of the anti-money laundering and counter financing of terrorism (collectively referred to as AML/CFT) regimes of some countries, including Pakistan.
Pakistan has been in the FATF’s ‘grey list’ since June 2018. It has been able to fulfil 18 out of 27 points on the watch list and is a fit case to be placed in the ‘blacklist,’ but China and traditional allies Turkey and Malaysia saved it from an immediate downgrade to the ‘blacklist.
Pakistan’s media cited this as a victory for the Imran Khan government, and criticised India for trying to push Islamabad into the ‘blacklist.’ Pakistan’s Foreign Office also issued a statement saying, “We regard the statement issued by India regarding the FATF report as preposterous and unwarranted”.
The danger of Pakistan finding itself in the blacklist persists as the FATF would take a final decision in October.
The Indian delegation led by its Financial Intelligence Unit (FIU) provided fresh evidence of the activities of Hafiz Saeed and Falah-e-Insaniyat Foundation (FiF) and said Pakistan sponsored terrorist outfits were still carrying out terrorist activities in many Indian cities, especially in Jammu & Kashmir. India, which is the co-chair of the joint FATF and Asia Pacific Group (APG), tried to impress upon other members that Pakistan has failed in curbing financial crimes and has been unable to execute the FATF’s action plan.
The first deadline for implementation of the action plan ended in January, then it was extended to May 2019 but, with Pakistan failing to comply with the stipulations, the FATF gave another extension up to October 2019. If Islamabad fails to comply by October, it will be blacklisted.
India and four other nominated members, including US, Germany, France and UK, have maintained that the risk of terrorist attacks to Pakistan’s neighbours has not reduced and terrorist organisations operated from Pakistan are continuing to function. Security agencies have arrested leaders and activists of terrorist outfits like Lashkar-e-Taiba (LeT), Jamaat-ud-Dawa (JuD), Jaish-e-Mohammed (JeM) and FiF under the Maintenance of Public Order Act (MPO) and not under anti-terrorism acts.
Under the MPO, security agencies cannot imprison terrorists for more than 60 days. Terrorist leaders like Saeed and Masood Azhar have never been arrested or tried under anti-terror laws.
According to a rough estimate, Pakistan is losing around $10 billion annually by being on the ‘grey list’. That loss will be considerably higher if it enters the ‘blacklist’. Islamabad’s continuation in ‘grey list’ means that international organisations like International Monetary Fund, World Bank, The European Union and Asian Development Bank monitor it more closely. Other international organisations like Moody’s Corporation, Standard & Poor’s (S&P), Fitch Ratings Inc. would also downgrade Pakistan’s ratings, thus multiplying its financial problems manifold.
Pakistan should try to implement FATF and APG conditions, but the powerful Pakistan army and its intelligence wing Inter-Services Intelligence (ISI) do not want to relinquish the policy of assisting and abetting diverse terrorist outfits. Pakistan has waged a low-intensity war against India and assists the Afghan Taliban against the elected government of that country.
The Army instructed the foreign ministry to contact FATF and APG member countries to convince them to vote in favour of Pakistan. Foreign ministry officials are meeting and explaining to members about various measures Pakistan has taken to control terror financing and money laundering.
Islamabad has projected that there will be no foreign currency transactions without tax details, no currency exchange of over $500 without photocopies of national ID cards, etc. The country claims it has banned numerous terrorist outfits including JuD, JeM, LeT and seized their assets. Pakistani sources claim they have seized 700 properties belonging to terrorist organisations.
However, the FATF said since Pakistan had conformed to only 18 points of 27 points, it needed to do more and its performance was ‘unsatisfactory’. The FATF also counselled Pakistan to comply with all the benchmarks or risk a downgrade. Pakistan was saved from the ‘blacklist’ for now, but chances of it coming out of the ‘grey list’ are remote, as Islamabad will need a minimum of 15 of 36 votes, which will be an arduous task. Secondly, Pakistan will not make genuine efforts to terrorist outfits as these organisations are an important part of the country’s foreign policy.
*About the author: The author is a New Delhi-based strategic analyst. He can be contacted at [email protected]
Source: This article was published by South Asia Monitor