Thursday, January 20, 2022

FATF retains Pakistan in the Grey List


The Financial Action Task Force’s (FATF) plenary session ended its five-day deliberation on Friday and put out the list of countries that it has identified to have “strategic deficiencies”. The Paris based UN watchdog that looks after issues like terrorism financing, money laundering and the flow of black money at the global level has retained Pakistan in the list of countries with “strategic deficiencies”. The list is generally referred to as the “grey list”. The continued grey listing of Pakistan has several immediate and global implications that are important to South Asia.

The FATF has noted that Pakistan has made progress in addressing several of the issues that the watchdog has been raising in its plenary sessions. Pakistan has completed 26 “action items” that were mentioned in the “2018 action plan” when Pakistan made a high-level political commitment to implement the anti-terror and anti-money laundering moves. However, the latest FATF plenary noted that Pakistan failed to implement the most crucial of the 27 action items: to act against terror masterminds facing UN sanctions.

The development is a setback to the Imran Khan government which has been dealing with the continued economic downturn in Pakistan. The 39 member grouping works in close coordination with the UN Security Council which evaluates countries for commitment to anti-money laundering and countering the financing of terrorism (AML/CFT).

The latest move from FATF is expected to keep Pakistan under pressure to come clean on its links with the UN-designated terror masterminds Hafiz Saeed, the chief of Lashkar-e-Taiba and Masood Azhar, chief of Jaish-e-Mohammad. Both LeT and JeM are a threat to India as well as to Afghanistan.

The continued grey listing of Pakistan has come at a time when Pakistan is back at the centre stage especially because of the developments across the Durand Line in Afghanistan where the Taliban forces have stormed at least one-fourth of the country’s 421 districts. It is well acknowledged that Taliban fighters generally receive sustained support from the Pakistan military establishment.

There has been a sudden highlighting of Pakistan’s links with Saeed and Azhar over the past week, which also saw an unexplained explosion near Saeed’s residence in Lahore, leaving at least two persons dead and dozens injured. The incident brought to light the fact that Pakistan continues to nurture some of the UN-designated terrorists and terror masterminds despite repeated urgings from watchdogs like FATF to prosecute them according to the due process of law.

The recent twin attacks on the Indian Air Force installation in Jammu by drones carrying explosives has once shown the nexus between the terror sympathisers in the region. This again proves that Pakistan needs to cleanse the terror infrastructure that it has fostered in its territory since the 1980s. According to an estimate by an Islamabad-based think tank, Pakistan has suffered a loss of US$ 38 billion as a result of the continued greylisting of the country by FATF.

The latest grey listing means Pakistan will continue to face difficulties in dealing with international financial institutions. It also means that investments into Pakistan will be subjected to sustained and detailed scrutiny to ensure that money entering the country does not end up financing any of the terrorist networks.

Pakistan has publicly protested against the continued grey listing by FATF. Reports also indicate that the latest grey listing is because Islamabad refused to provide military bases to the United States after its forces withdrew from Afghanistan in September. Pakistan which was on FATF’s “Increased Monitoring Lists” from 2009-2015 was taken off the list in 2015. But it was re-listed in 2018. The main issue that appears to keep Pakistan on the list is its lack of willingness to prosecute the UN-designated terror masterminds Hafiz Saeed and Masood Azhar.

The grey listing by FATF shows that the issue of money laundering and consequent funding of illicit activities is fast spreading to other countries as well. The latest grey list includes countries like the Philippines, Malta, South Sudan and Haiti.


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