ISLAMABAD: The Financial Action Task Force (FATF) kept Pakistan on the grey list for an extended period, despite acknowledging the measures taken by Islamabad to strengthen its Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) regime.
Pakistan’s decision to remain neutral in the Russia-Ukraine war and its tilt towards China has become hard to swallow for the United States and the European Union. This bitterness was clearly reflected in the FATF judgement.
In a statement, FATF said that in June 2018, Islamabad made high-level commitment to work with the task force and Asia-Pacific Group (APG) to strengthen its AML/CFT regime and to address its strategic counter-terrorism financing-related deficiencies. Since then, Pakistan has made significant progress across a comprehensive CFT action plan.
“Pakistan has completed 26 of the 27 action items in its 2018 action plan. The FATF encourages Pakistan to continue to make progress to address, as soon as possible, the remaining item by continuing to demonstrate that the task force investigations and prosecutions target senior leaders and commanders of the UN-designated terrorist groups,” it said.
“In response to additional deficiencies later identified in Pakistan’s 2019 APG Mutual Evaluation Report (MER), in June 2021, Pakistan provided further high-level commitment to address these strategic deficiencies pursuant to a new action plan that primarily focuses on combating money laundering.”
“Since June 2021, Pakistan has taken swift steps towards improving its AML/CFT regime and completed six of the seven action items ahead of any relevant deadlines expiring, including by demonstrating that it is enhancing the impact of sanctions by nominating individuals and entities for the UN designation and restraining and confiscating proceeds of crime in line with Pakistan’s risk profile.”
“The country should continue to work to address the one remaining item in its 2021 action plan by demonstrating a positive and sustained trend of pursuing complex money laundering investigations and prosecutions,” the statement said.
Now, Pakistan has been found compliant on 26 points of the 27 action plans and in the second list of demands of the Asia-Pacific Group, of the six action plans, Islamabad was compliant on five points. So Pakistan will have to comply with each one of the two different action plans to qualify for the onsite inspection that will pave the way for exclusion from the grey list.
Political and economic commentators said that the outcome is not shocking but clearly shows that injustice has been done with Pakistan.
It seems strange that at a time when Pakistan was trying to comply with the FATF action items, it was also included in the mutual evaluation list of the Asia-Pacific Group (APG), as well.
“It is very much apparent that the lobbies in FATF and its affiliate APG wants Pakistan to remain in the grey list for a long time to keep it under pressure because fulfiling demands of the two bodies simultaneously is very challenging and an uphill task,” a senior journalist said.
Under 27 action points of FATF, Pakistan was asked to work on three areas. Firstly, to introduce legislative amendments and reforms to strengthen AML/CFT regime, secondly, it has to improve its administrative control in governance and financial matters and lastly taking action against organisations and outfits involved in money laundering and terrorist activities and banned them under UN clauses of 1267 and 1373. So far, Pakistan has complied with the first two demands but the major bottleneck is in the third one of investigation and prosecution process against the banned outfits and organisations.
The FATF and APG now want Pakistan to speed up the prosecution process against the banned outfits and seize their source of funding.
What the FATF and APG is not realising is that prosecution against any group can be done as per the law of the land and it will be done in due course of time, not on the wish of someone.
The strong presence of Indian lobby in FATF and APG is trying its best to force Pakistan in the black list but their efforts were thwarted by China, Malaysia and Turkey. On the diplomatic front, India is trying its best to malign Pakistan and the government has to take drastic measures to counter Indian diplomacy.
According to the senior government officials, Pakistan now aims to fully comply with the 2021 action plan on anti-money laundering and combating terror financing by the end of January 2023.
Recently, the International Monetary Fund (IMF) has also asked Pakistan to complete the last remaining item in the 2018 AML/CFT action plan on the effectiveness of terror financing investigations and prosecutions of senior leaders of the UN-designated terrorist groups and promptly address the deficiencies identified in the APG’s Mutual Evaluation Report under the 2021 action plan.
In the previous plenary meeting after adding Turkey the FATF inducted the UAE to its increased monitoring list, also known as the grey list of countries with inadequate controls over terrorism financing.
The watchdog also decided to appoint T Raja Kumar of Singapore as its next president for a fixed two-year term.
Pakistan’s Foreign Office took the stance that there could be only political reasons for keeping Islamabad on the grey list, despite its commitment for making progress on all the technical grounds since 2018.
Since the former President Donald Trump’s government, Pakistan is constantly facing a witch-hunt from the US authorities, which is still going on.
In 2017 Habib Bank Limited New York branch settled out of court with the Department of Financial Services (DFS) by agreeing to pay a fine of $225 million against various violations of the state’s regulatory provisions and also wind-up its operations in the US.
Just after Prime Minister Imran Khan’s visit to Russia where he held one-on-one meeting with Russian President Vladimir Putin, the US government agencies fined the National Bank of Pakistan (NBP) New York branch a total of $55 million in fines for repeatedly violating anti-money laundering (AML) regulations and the Bank Secrecy Act (BSA).
The Federal Reserve Board announced a $20.4 million penalty for anti-money laundering violations and the New York State Department of Financial Services issued a $35 million fine for failing to maintain effective AML procedures.
In a media briefing, Finance Minister Shaukat Tarin said that the Paris-based global watchdog’s decision to keep Pakistan in the grey list has no merit to retain the country’s status, as it has made significant progress to meet its tough conditions.
“Now it is obvious that this decision was taken on political considerations rather than on merit. The FATF decision is politically motivated and it was taken under the influence of some powerful nations to pressurise Pakistan over its strategic policy decisions,” Tarin said.
Endorsing the views of the finance minister, former diplomat and political analyst Zafar Hilaly said that the IMF programme and the FATF decision is meant to punish Pakistan for adopting independent foreign policy.
“The IMF programme and the FATF decision are all meant to punish Pakistan for adopting an independent foreign policy, which is based on regional considerations rather than appeasing the US,” he said.
The US now sees China as a serious threat and it will try its level best to ensure that the projects such as the China-Pakistan Economic Corridor (CPEC) will not succeed, he said.
For Hilaly, to counter China’s threat, the US is promoting India and victimising Pakistan.
“Pakistan and India abstained during the voting on the UN Resolution against the Russian aggression but the US and European Union only criticised Pakistan and did not utter a word against India,” he said, adding that India is buying oil from Iran, despite economic sanctions.
Besides, there are also reports that India is involved in the trading of uranium but the US has ignored these issues. However, whatever happens in Pakistan is a serious concern for the Western countries.
“The government and, we as a nation, have to remain headstrong to get out from the US influence and fully support Prime Minister Imran Khan in this cause,” he added.
The FATF is an inter-governmental body established in 1989 to combat money laundering, terrorist financing and other related threats to the integrity of the international financial system. It has 39 members, including two regional organisations — the European Commission and the Gulf Cooperation Council.