Pakistan To Remain In FATF Grey List

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The plenary session of the Financial Action Task Force (FATF) which took place last week, decide to retain Pakistan on the “grey list” till February 2021. This was due to Pakistan’s repeated failures to undertake comprehensive measures against UN-proscribed individuals and organisations and put an effective curb by investigating and prosecuting them. Pakistan has been hesitant in ending its long-standing association with terror outfits that operate freely and are actively supported and funded by the Pakistani state and under whose patronage, a thriving network of terror financing and money laundering has taken deep roots. 

The decision was announced at a virtual press conference held at the end of plenary of the Paris-based organisation. The international body had earlier laid out a set of 27-point conditionalities out of which Pakistan was able to meet 21. This deficit in meeting the laid-out clauses has made Pakistan to remain in the grey list till it further improves its record. Marcus Pleyer, FATF’s President, noted that though there is some “progress”, Pakistan still “needs to do more”. For Pakistan, the double whammy is that due to continued grey listing, it has to stay deprived of receiving help from the international financial institutions.

The FATF formed in 1989 is a global body comprising 39 members that seeks to undertake action against terror financing and money laundering activities. India is member of the FATF and is also part of its regional off-shoot-The Asia Pacific Group- one that is taking up Pakistan’s case. Notably, India has been actively persuading the world community to act against Pakistan’s perennial collusion with terror groups and the way these outfits have unleased havoc in the subcontinent.

Pakistan has unrelentingly pursued terrorism as an instrument of state policy not only against India but also in the adjoining region, especially in Afghanistan. Pakistan’s support to terrorist groups and their proxies have continuously frustrated efforts of the coalition forces towards bringing about a semblance of peace, stability and order in Afghanistan. This precisely is the reason why powerful countries like the United States, the United Kingdom, Germany and France have expressed strong dissatisfaction towards Pakistan’s sheer reluctance in nailing the terror groups or ceasing their funding. For these reasons, there is consensus amongst an array of member-nations of the FATF on Pakistan’s dubious role in terror funding and overall hobnobbing with terror groups. Pakistan received support from just 3 nations-China, Turkey and Malaysia during the latest plenary session. Due to their backing, Pakistan’s slip into the black list has been delayed.

Pakistan was grey listed in June 2018 and a 27-point action plan was given to Islamabad for acting against terror funding which was required to complete by October 2019. By February 2020, Pakistan is said to have acted only on 13 out of the 27 clauses. Henceforth, it got another 4-months grace period to meet the remaining requirements before the June 2020 Plenary. However, due to the Covid-19 pandemic, the plenary was postponed and the country got an added 4-months period. The FATF suspended the mutual review processes also in the meanwhile. Despite the extended timeframe, it is not surprising, that Pakistan failed to act determinedly to meet FATF’s conditions. Quite understandably, support to terror is so ingrained in Pakistan’s system and establishment that even Prime Minister Imran Khan’s seemingly panic-stricken efforts to change this pattern have been in vain. The FATF fact-finding team will visit the country for verification only after all the 27 conditions are met.

Pakistan’s economy is struggling for long. The International Monetary Fund (IMF) that recently granted a bailout to rescue the country’s shortfalls, has also laid out stringent conditions for the Pakistan government to accomplish. In this regard, Mr. Imran Khan is treading a precarious balance- between keeping the army in good humour and also wanting to be seen as sincerely working towards improving the economic situation of the country. If Pakistan hopes to receive assistance from the international financial institutions, the only way ahead is to effectively cease the pervasive channels of terror financing that have existed under its watch and completely dry up their sources and origin.

Script: Dr. Priyanka Singh, Associate Fellow, Manohar Parrikar Institute for Defence Studies and Analyses

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