Finally, Pakistan managed to garner much-needed support from three-member states of the Financial Action Task Force (FATF) to avoid being placed on its blacklist, but the threats still lingers on. The country has been on the global money laundering watchdog’s radar since June 2018, when it was placed on the grey list for terrorist financing and money laundering risks after an assessment of the country’s financial system and security mechanism.
This is certainly a positive development that there is no imminent threat of blacklisting by the FATF due to crucial support from Turkey, China and Malaysia, but Pakistan had to complete its action plan aimed at fully blocking the money laundering and other financial loopholes. An aggressive diplomatic effort by Pakistan frustrated the looming threat with the support of Turkey, China, and Malaysia. The 36-nation FATF charter, the support of at least three member states was essential to avoid the blacklisting. New Delhi — co-chair of the joint group of FATF and Asia Pacific Group wanted Pakistan to be placed on the Paris-based watchdog’s blacklist of the countries, which fail to meet international standards in combating financial crimes.
Confirming the development that took place at the five-day meeting of the watchdog’s Plenary and Working Group meeting in Orlando, Florida last week, an official at Pakistan’s foreign ministry admitted that “the danger is still not over.” The group will formally announce the decision of not blacklisting Pakistan in its Plenary scheduled in Paris in October this year.
In a statement in February this year, the FATF said, “Given the limited progress on action plan items due in January 2019, the FATF urges Pakistan to swiftly complete its action plan, particularly those with timelines of May 2019.” The watchdog agreed that Islamabad had made progress towards implementation of the action plan — negotiated between Pakistan and the FATF members — in June last year but still sought “dissuasive sanctions” and “effective prosecution” in this connection. Islamabad, at a meeting in Guangzhou, China last month, was reportedly asked to “do more” as its compliance on 18 of the 27 indicators — pointed out in the action plan — was unsatisfactory.
In recent months, Pakistan has taken some major steps in accordance with the action plan, which included: no foreign currency transactions without a national tax number, and ban on currency change of up to US$500 in the open currency market without submission of a national identity card copy. In addition to that Pakistan also proscribed several militant groups and seized their assets, including Jamat-ud-Dawa’h, and Jaish-e-Mohammad (JeM), the groups blamed for several terrorist attacks such as the 2009 deadly Mumbai attacks killing over 150 people.
Pakistan was in constant touch with Turkey and other friendly countries to use their good offices to help it in moving out of the grey list. Pakistan had faced a similar situation in 2011 when it was included in the grey list and was taken out only in 2015 after it successfully implemented an action plan. Islamabad requires at least 15 out of 36 votes to move out of the watchdog’s grey list.
Lately, Foreign Minister Shah Mahmood Qureshi claimed that United Kingdom had agreed to support Pakistan in its efforts to move out of the list. Political and security analysts believe, it will not be a walk in the park. The latest may be good news, but the danger is still looming. This is just a temporary relief allowing Pakistan to rally more and more support to permanently get rid of this threat. Pakistan is still required to meet some key FATF conditions to move out of the list.
The active diplomacy with the help of friendly countries would give a boost to Islamabad’s ongoing efforts steer out of FATF scanner. Pakistan is already in touch with FATF and Asia Pacific Group members and other friendly countries, and briefing them of measures it has taken to combat terror financing and money laundering recently. However, Pakistan has not been able to persuade the US. It is believed that the US opposition is not based on FATF charter but on political consideration, mainly because of clash of interests in Afghanistan, and ever-growing relations with China.
Pakistan is likely to be removed from the gray list though FATF may make some observations urging Islamabad to remain vigilant and continue to strengthen its anti-money laundering and counter-terrorism financing regime. The removal of Pakistan from the gray list is likely both due to diplomatic support of China, Turkey and Malaysia and due to a host of measures taken to stop money laundering and terror financing. Seeking the help of other countries, notably Saudi Arabia and the US, would be important but even with the already available support of China, Turkey and Malaysia, it was very much likely that Pakistan would get out of the grey list. On the economic front continuing with strong resolve all measures taken to stop money laundering and terror financing and initiating more measures is important to avoid any hostile FATF action in future, he maintained.