Pakistan dodges a bullet at FATF hearing

Concluding the three-day review meeting in Beijing, Pakistan heaved a sigh of relief as the Financial Action Task Force (FATF), the terror-financing watchdog President Marcus Pleyer announced on October 23 during its virtual plenary session that Islamabad would not be blacklisted but will remain in the Grey List till February 2021. The Paris-based terror funding regulator held virtual sessions on an action plan from October 21 to 23.

The FATF evaluated Pakistan’s compliance efforts vis-à-vis money laundering and terror financing because the delegation from Islamabad convinced FATF members that it would swiftly complete the action plan to check fund flows to terrorist groups.

Pakistan was placed on the ‘Grey List’ by the FATF in June 2018 and was given a plan of action to complete it by October 2019 or face the risk of being blacklisted. In February, the FATF gave Pakistan, which missed 13 targets, a four-month grace period to complete its 27-point action plan against money laundering and terror financing committed with the international community.

Islamabad was constrained to adopt tough measures to escape the dragnet of the FATF’s Grey List. Cash strapped and debt-ridden Pakistan in August imposed financial sanctions on 88 banned terror groups and their leaders, including 26/11 Mumbai attack alleged mastermind and Jamaat-ud-Dawah (JuD) chief Hafiz Saeed, Jaish-e-Mohammed (JeM) chief Masood Azhar and Dawood Ibrahim.

In July, Pakistan’s upper house of the Parliament, the Senate, unanimously approved two bills related to the tough conditions set by the FATF. In August, parliament’s lower house passed four FATF-related bills as part of the efforts by Pakistan to move from the FATF’s Grey List to the White List. In September, the joint session of the parliament amended about 15 laws to upgrade its legal system matching international standards as required by the FATF.

Currently, Iran and North Korea are on the FATF black list. Ahead of the Beijing meet, Pakistan lobbied hard with the US as its presence in the Grey List had adversely impacted its sagging economy. Foreign Minister Shah Mehmood Qureshi was in Washington last week, lobbying with the US on removing it from the FATF Grey List. Subsequently, US principal deputy assistant secretary of state Alice Wells visited Islamabad this week and lauded Pakistan’s efforts to comply with FATF guidelines. Pakistan PM Imran Khan’s trip to Davos and meeting with the US President too gave hope to Pakistan. China also came to its rescue. Beijing stated on October 22 that Pakistan made “visible progress” to strengthen its counter-terrorism financing system, which should be encouraged by the world community. A Chinese official declared that China hoped the FATF will continue to offer constructive support and assistance to Pakistan in its continued efforts to improve the counter-terrorism financing system and effectively fight terrorist financing. Pakistan’s allies Turkey and Malaysia, tacitly backed by FATF chair China, provided three necessary votes to avoid blacklisting at last year’s FATF meets.

At the Beijing moot, China, United States, United Kingdom, Australia, New Zealand, Japan, among others, did not make any adverse remark on Pakistan’s action plan. The FATF statement is a major reprieve for Pakistan, which last October was asked to comply with its recommendations by February. Pakistan needed 12 votes out of 39 to exit the Grey List and move to the White List.

Pakistan has been bending backwards to avoid the ignominy of being blacklisted or being retained in the Grey List. Besides plugging gaping holes in leakage of financing to terror networks, Islamabad has made visible attempts to curb the scourge of terrorism. Additionally, the foreign office of Pakistan has made tangible contributions to bring peace in war ravaged Afghanistan. The forthcoming presidential elections in the United States, necessitated expediting a deal with Taliban as well as placing chess moves to counter Iran before the Americans went to polls. President Donald Trump’s rationale for having a soft corner for Pakistan and its compliance on FATF strictures was reportedly based on part of his re-election strategy in scoring positive results with Kabul and Tehran.

The FATF reviewed Pakistan’s progress on the 27-point action plan during the session but the country, which itself was battered at the hands of terrorists, has been unable to comply with six of the 27 points in the global terror financing and money laundering watchdog’s action plan. The International Cooperation Review Group of the FATF acknowledged that Pakistan had complied with 21 points of the action plan.

A FATF statement issued at the end of the review meeting, read: “To date, Pakistan has made progress across all action plan items and has now largely addressed 21 of the 27 action items. As all action plan deadlines have expired, FATF strongly urges Pakistan to swiftly complete its full action plan by February 2021.” With Pakistan’s continuation in the ‘Grey List’, it is increasingly becoming difficult for the country to get financial aid from the International Monetary Fund (IMF), World Bank, Asian Development Bank (ADB), and the European Union, thus further enhancing problems for a nation which is in a precarious financial situation.