Wednesday, August 4, 2021

Grey Not Black: FATF Gives Pakistan Yet Another Chance

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When the Financial Action Task Force (FATF) plenary started last Sunday, in Paris, with more than 800 representatives from 205 countries around the world, there were speculations in Pakistan about its possibility of coming out of the grey list.

Among other issues, the FATF plenary sought to discuss progress made by Pakistan and other countries in meeting their commitments to counter money laundering and terror financing. Countries put in the grey list are deemed to present a risk to the global financial system. Pakistan has been in the grey list since June 2018.

On February 19, 2020, media reports started trickling in that Pakistan would continue to remain in the grey list till June this year. This was inevitable since the International Co-operation Review Group (ICRG) tasked with evaluating the compliance report submitted by Pakistan on February 17, reportedly concluded that Pakistan had not taken sufficient steps to curb terror financing.

This was despite Pakistan’s efforts to convince the world community with its move to convict Hafiz Saeed, leader of Lashkar-e-Taiba, which had claimed attack on Mumbai in November 2008. An up-to-date overview of the ratings for all countries, put out on February 13, 2020, suggested that Pakistan was fully compliant only on one of the 40 recommendations. There were many deficiencies which Pakistan had not paid attention to.

The non-compliance of Pakistan was of such order and so conspicuous that even its all-weather friend China, which is the present chair of FATF, did not support its request for removal from the grey list. Apart from Turkey, all other countries favoured the idea of Pakistan’s continuation in the grey list till June, when the next plenary would be held.

Last year in October, the Mutual Evaluation Report brought out by FATF held that Pakistan had not made adequate progress on its commitments to take measures to stop terror financing and money laundering. It had noted with concern and frustration that even if all deadlines in the action plan had expired, Pakistan lacked seriousness to address its Terror Financing (TF) risks.

It had chided Pakistan for not even having a sufficient understanding of the TF risks, and it had only largely addressed five of 27 action items, urging it “to swiftly complete its full action plan by February 2020”, failing which it had threatened to advise most of the member countries “to give special attention to business relations and transactions with Pakistan”.

If Pakistan aspired for its removal from the grey list, it was unrealistic given the fact that it was aware of its lapses in keeping its own commitments. If it was relying on its friend China, it was more for not getting into black list than to get out of the grey list it is currently in. The fact remains that the rules and procedures being followed in FATF hold that such decisions would be taken by consensus. Given the fact that India is also a member, it was unlikely to let Pakistan off the hook because of its poor record on TF.

It was also natural that apart from Turkey, which is supporting Pakistan blindly on all issues in recent months, and perhaps one or two more countries, its dismal track record would not elicit critical support from majority of the countries to take Pakistan out of the grey list. Islamabad has been asked to convict and prosecute top leaders of all terrorist organisations to demonstrate its commitment to take action against terror.

In Pakistan, its leaders are patting themselves on the back for having warded off the threat of slipping into the ‘Black List’; but deep in their hearts, they must be lamenting the sorry state they have pushed themselves into. Pakistan’s years of romance with terror has led to massive contamination of the entire political, social, economic and legal systems making it almost impossible to take adequate measures to deal with the menace. Rather than trying to hoodwink the world, Pakistan should look at it as an opportunity to redeem itself. If it does not, its best friends may find it difficult to stop its slide into the black list.

Script: Dr. Asok Behuria, Senior Fellow & Coordinator South Asia Centre, IDSA

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