Pakistan’s Ignominy At FATF Continues

The six-day-long Financial Action Task Force (FATF) Plenary held last week in Orlando, USA, concluded with a severe indictment for Pakistan to honour its commitments to the global financial watchdog by October, or risk downgrading its position from the existing ‘grey list’ to the eventual ‘black list’.

It has been a year since Pakistan made a commitment to work with FATF and the Asia Pacific Group (APG) to strengthen its anti-money laundering (AMT) and counter-terror financing (CTF) regime and address its strategic “counter-terrorist financing related deficiencies”. Islamabad’s record in this regard has been dismal. Apart from taking few cosmetic steps, it has done nothing significant to make it impossible for the known terror outfits to operate out of its soil.

Notably, the FATF marked its 30^th anniversary and celebrated its enhanced stature and reputation as a group leading ‘global action against money laundering, the financing of terrorism and proliferation’, committed to work in a ‘timely, targeted and effective’ manner, ‘with a new, open-ended, mandate’.

With the FATF asserting itself, a non-compliant Pakistan will, in the days to come, find it immensely difficult to rely on its limited friends and saviors to bail it out for its omissions and commissions in the twin fields of Anti Money Laundering and Counter Terror Financing (AML/CTF), which are being regarded as the most important catalysts for terrorist attacks worldwide.

In February 2019, following Pulwama attacks, the global body had not only condemned the ‘violent terror attack’, but also held that ‘while these attacks kill, maim, and inspire fear, they cannot occur without money and the means to move funds between terrorist supporters’.

In an indirect reference to Pakistan, it had also said that ‘as terrorists and those who finance them, continue to seek out loopholes or new methods to raise, move and use funds, it is clear that jurisdictions in a number of regions face severe challenges in developing effective CFT regimes’.    

The latest compliance report of June 2019, FATF clearly said that it found serious ‘strategic AML/CFT deficiencies’ in Pakistani ‘jurisdiction’ despite Islamabad developing an action plan with the FATF last year. In a direct rebuke, FATF mentioned that even though Pakistan took some steps towards improving its AML/CFT regime, ‘it did not demonstrate a proper understanding of its transnational TF risk’.    

The FATF expressed its ‘concern’ for Pakistan’s failure “to complete its ten-point action plan” drawn up with the FATF, and meet the deadlines of both January and May 2019. It also warned Pakistan that it would take the next logical step forward in case of its further non-compliance in October, when its self-imposed compliance deadline would expire. The exact sentence with which the global body concluded its report on Pakistan reads, “Otherwise, the FATF will decide the next step at that time for insufficient progress”.

However, the Pakistani government’s press release sought to mislead their own people as well as the world; the press statement of Pakistan tried to convey that FATF had patted them in the back for the progress made towards the implementation of the Action Plan and improve its AML/CFT regime and encouraged them to take further steps in that direction in the days to come.

The Indian Ministry of External Affairs said, Pakistan is expected to fulfill its “commitment to the FATF and take credible, verifiable, irreversible and sustainable measures to address global concerns related to terrorism and terrorist financing emanating from any territory under its control.”  

Reeling under a severe economic crisis at the moment, Pakistani authorities might have tried to invoke the sympathy of some of Pakistan’s traditional friends, who are also members of FATF, to provide Pakistan a breather of about three months. However, the decision makers in Islamabad are left with little choice but to take concrete steps against terror financing and money laundering which it has till now been enabling to terror groups and destabilising the South Asian region.

Script: Dr. Ashok Behuria, Coordinator, South Asia Centre, IDSA