FATF: good and bad

There is good news and there is bad news for Pakistan from the meeting of the Financial Action Taskforce (FATF) on Friday. Pakistan has managed to avoid being blacklisted. This will no doubt be received as good news. However, the stern warning the country has received cannot be pushed aside so easily. While Pakistan was able to receive the backing of important allies such as Turkey and Malaysia, there is little doubt that the country is still not out of danger. This is not just a moot point; this is exactly what the FATF chair said in a press conference. The statement issued from the body has given Pakistan until February 2020 to complete its full action plan. Effectively, this gives Pakistan four months to get its act together – after which it can attempt to wriggle out of being blacklisted again over non-compliance. While Pakistan retains some crucial allies to support its cause, the issue of non-compliance is a serious one. This is not just a matter of getting support from the right countries. Pakistan’s performance metrics on curbing terrorist finance show that it needs to do more.

The more worrying thing has always been that Pakistan remains the biggest victim of terrorism on the FATF table. This means that the stakes on the FATF table for failing to curb terrorist finance are the highest for Pakistan itself. The country should have used its run in with FATF to gets its act together, but it remains wanting in terms of both understanding and complying with international standards on combating terrorism finance and money laundering. This is the fourth deadline extension that Pakistan has received in a single year, which raises concerns. The words of the committee state that there needs to be significant progress across the full range of the action plan before the next plenary meeting.

India continues to push the view that Pakistan must be blacklisted – and has threatened countries that have allied with Pakistan with trade sanctions. Pakistan’s allies will continue to support us as long as we show sufficient progress on the technical front. With the FATF noting that Pakistan has only addressed five of the 27 metrics required, there is some way to go. If the country has not gotten close to fulfilling them in two years, it needs to buckle up for the next four months. What it needs to show is that it is serious in terms of taking action on terrorist finance and money laundering.