The right ideas

Will the new PTI government be able to bring Pakistan out of the FATF grey list? For starters, our new Finance Minister Asad Umar has said all the right things about the matter. The most important statement from him has been that it should be seen as ‘an opportunity rather than a challenge.’ Speaking before the Senate, Umar took the right approach when addressing the matter. But saying the right things is not going to get Pakistan out of the mess it is in. This might be a good opportunity to put Pakistan’s own house in order and in that it presents a significant challenge. Despite almost a decade and a half of fighting terrorism, Pakistan has not been able to address the financial side of the terrorist nexus.

The FATF report has identified 26 deficiencies which fall into three broad categories: currency smuggling, Havala/Hundi, and terrorist finance. With the next review set to take place in Jakarta on September 11-12, the current government has little time left to present its plan to improve Pakistan’s adherence to global money-laundering standards. Pakistan will complete its internal review on September 8 and it would be good to see the government share the findings with the public on its own.

The real challenge, in line with what Finance Minister Umar has said, is to address these deficiencies to serve our own interest. Being on the grey list is a hazardous position that could lead to Pakistan being put on the blacklist. The latter comes with international sanctions and is definitely a situation that the current government would like to avoid amidst the existing foreign reserve crisis. Umar has noted that Pakistan has been on the grey list before, but it is not a place that we want to remain on. With a 15-month deadline to address the FATF concerns, the timeline forward is not unrealistic. The formation of a National Executive Committee was integral to the process and this is now in place. However, it will need to be more than a mere paper committee as most such committees end up becoming. Responsibilities will need to be assigned and performance monitored to ensure that Pakistan does not fall back into this position. The current situation, where the country keeps coming in and out of the grey list, does not reflect well on our own challenge of tackling money laundering and terrorist finance. The finance minister has an opportunity to set things up for this situation not to arise again. It is important that the right words are followed by concrete action.