By Qudrat Ullah, LIPR AOP based in Islamabad
In the latest plenary session (01-04 March), Paris based Financial Action Task Force (FATF) continued to retain Pakistan on its Grey List despite appreciating the completion of 26 of 27 action points of plan by the international monitoring group. Pakistan has been on the Grey List since June 2018 and in total 34 action points were given; 27 by FATF and 07 by Asia Pacific Group on Money Laundering. The country has made progress and completed 32 of 34 action points. The remaining points which needed more action were terror financing investigations and prosecution of the leaders of United Nations designated terrorist groups.
The new addition on the list was United Arab Emirates (UAE) over its little progress in anti-money laundering regime and in combating the financing of terrorism against the action plan recommended by FATF in 2020. In October 2021, FATF added Turkey to Grey List, deemed it incapable of tackling money laundering. Ankara termed the group’s decision an “undeserved result,” given all of its compliance work.
FATF was established by G7 group of advanced economies to protect the global financial system, largely focusing on anti-money laundering and anti-terror financing regimes. Its members are west dominated and most of the countries on its Grey List are developing and underdeveloped countries. The composition of its members have made the watchdog mere a tool to force the targeted countries to comply with Western Security Standards. In August 2020, Reuters, in one of its investigations, revealed that some countries including Uganda, Serbia, India, Tanzania and Nigeria have targeted Non-Governmental Organizations (NGOs), journalists, Human Rights activists and lawyers through the legislations passed to meet the FATF’s standards.
Tom Keatinge, Director of Centre for Financial Crime at Royal United Services Institute in London, said, “FATF’s standards are increasingly not just being misunderstood, but are being purposefully abused”. Over the years Pakistan is complying with the FATF’s action plan and the latter itself admitted that Pakistan is progressing and even have completed action on 26 of its 27 tasks assigned. By keeping Islamabad on the list has raised many questions. In July 2021, the Indian External Affairs Minister S Jaishankar said “Narendra Modi government ensured that Pakistan remained on the grey list of the FATF”. This open confession by India has somehow made the claims of Pakistan verifiable that the international watchdog is used politically against Islamabad.
In Pakistan, many were of the view that the retention of the country in FATF’s increased monitoring list was to punish Pakistan for its role in Afghanistan. Muzzammil Aslam, CEO Tangent Capital, said that they (U.S. and other members of FATF) are trying to put pressure on Pakistan because of what’s happening in Afghanistan. Shah Mehmood Qureshi, Pakistan’s Foreign Minister, has constantly reiterated that the monitoring group is a technical platform and it should not be politicized for the interests of some nations.
Ned Price, U.S. State Department spokesperson, back in July 2021, said we recognize Pakistan’s progress, but we encourage Islamabad to continue working with FATF to swiftly complete the remaining action item. The demands made by U.S. are contrary to the statistics regarding other countries. Pakistan based Islamabad Policy Research Institute (IPRI), in its report said that Pakistan is one of the few countries which had the lowest ratio of non-compliance of FATF action plan.
The Institute while detailing the statistics of countries, reported that France, where FATF is based, has 25 percent non-compliance ratio compared to 12.5 percent by Pakistan. Other countries including U.S. (22.5 %), Japan (27.5%), New Zealand (30%), Georgia (32.5%), South Korea (20%) and Russia (12.5%) have non-compliance ratio but all are out of the Grey List.
In 2019, ahead of the meeting, one of the Western diplomats, on the condition of anonymity, told New York Times that one of the factor helping Pakistan to evade the sanctions was the Islamabad’s cooperation to get U.S. and Afghan Taliban to reach a peace deal.
According to the tasks assigned by FATF, Pakistan had made all the necessary legislations to tackle the money laundering, expedited the process against terror financing. It also has taken action against U.N designated terror outfits by filing cases on the top leadership. Yet all steps taken by Pakistan are still not sufficient just because U.S. and India say-so.
The official statements by India, the do more demands of U.S., the fallout of Afghanistan were highly likely the reasons against Pakistan for being on FATF’ list. Though it is premature but the neutral stance which Pakistan has taken in the current Russia-Ukraine war, may also add to the reservations of European Union and U.S. particularly to extend the country’s designation beyond June 2022.
