WHETHER— Pakistan’s name be retained or removed from the Financial Action Task Force (FATF) grey list—the decision will be duly made during FATF’s preliminary session (Feb16-21 to be held in Paris as the intergovernmental organization, reviews Pakistan’s measures at the meeting. If power politics is not on the cards but an exercise of judicious perceptivity remains the core of the FATF’s decision-making, there appear some pragmatic hopes that Pakistan’s name will be removed from the Grey-list. Xiangmin Liu, DG of the Legal Department at Beijing’s Central Bank, is the current FATF President.
In its last plenary session in China (October-2019), Pakistan rightly despatched a detailed reply to a Joint Group of the Financial Action Task Force (FATF) in order to impart the due progress on curbing money laundering and terror financing in Pakistan. According to a report in The News, a top government official has confirmed the development. The progress report, which is 120 pages in length and has a 500-page long annexe as well, has been properly scrutinised by the FATF body. All required details were objectively deemed necessary to share progress on the 22 points that must be met before Pakistan could justifiably claim to come out of the grey list. The FATF has shown its official satisfaction on just a five-point action plan out of the total 27, making it a challenge for Pakistan to comply with the remaining points in the stipulated time. That has been the main reason Pakistan was kept on the grey list for an extended period until February 2020.
The FATF’s advocated guidance aims to provide support in designing Anti-Money Laundering and Terrorist Financing (AML/CFT) measures that meet the goal of financial inclusion, without compromising the measures that exist for the purpose of combating crime. The revised guidance reflects the changes made to the FATF Recommendations in 2012—focusing on the reinforcement of the risk-based approach (RBA), as a general and underlying principle of all AML/CFT systems. The FATF’s prime purpose is to develop and enhance policies at international and national levels to target money laundering and terrorist financing. In its own words, the FATF “works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.”
The membership of international organizations in the FATF with an AML/CFT mandate seems to have created a vertical crossover of the FATF in international law policymaking. This obviously derives from the close relationship between the UN and the FATF which has been endorsed by the UNSC resolutions both current and previous. Principally, the UNSC Resolution 2462 (2019 under chapter VII) refers to previous UNSC resolutions that require all countries of the world to ensure that their domestic laws and regulations establish serious criminal offences that enable prosecution and penalization of terrorist funding and financing. To honour the respective international law implications of the FATF, Pakistan has introduced a series of domestic reforms legislation in 2019 including the establishment of the FATAF cells at both the NAB headquarters and the FIA. In addition, the NAB has signed the MoUs with the FBI and UK’s Crime Agency.
According to FATF norms, Islamabad has to completely overhaul its financial network system to strengthen its anti-money laundering/countering the financing of terrorism regime, or AML/CFT, regime. So far, Pakistan has only largely addressed five of 27 action items, with varying levels of progress made on the rest of the action plan. The FATF strongly urged the country to swiftly complete its full action plan by February 2020. Islamabad is diplomatically engaged in warding off the fears from any FATF actions “Should significant and sustainable progress not be made across the full range of its action plan by the next plenary, the FATF will take action, which could include the FATF calling on its members and urging all jurisdictions to advise their FIs (financial institutions) to give special attention to business relations and transactions with Pakistan,” the FATF said in a previous statement. In the last FATF’s session, The Pakistani authorities told the FATF body that sanctions have been imposed on the outlawed outfits.
The delegation also informed the watchdog that case registration over terror financing in Pakistan has increased by 451 per cent. Arrests over terror financing have increased by 677 per cent while the process of giving penalties in such cases has increased by 403 per cent, the FATF was told. As of December 2019, some 827 cases of terror financing have been registered, the Pakistani delegation told the FATF. While responding to Pakistan’s progress report, a regional affiliate of the Financial Action Task Force (FATF) last month forwarded 150 comments and clarifications in all sectors, but mostly related to the action taken by the country against banned groups and proscribed persons. “Sources in the Interior Ministry said that the there were several questions regarding action taken against seminaries affiliated with banned organisations or proscribed persons who have been listed in VT Schedule of the Anti-Terrorism Act (ATA). The FATF has also sought other details including copies of lawsuits filed against banned organisations and proscribed persons. Originally there were 27 objections over Pakistan and the country was able to respond to five of them.
However, both the US and China have appreciated Pakistan’s progress on the FATF required action. The comments of Ambassador Alice Wells – US Acting Assistant Secretary of State, Bureau of South and Central Asian Affairs during her latest visit, have been positive regarding Pakistan’s progressive actions. Now Pakistan urgently requires mustering up diplomatic support for its efforts to come out from grey list and land into the white as Islamabad needs 12 votes out of total 39 in the plenary meeting of the FATF scheduled to be held in Paris on 16 February 2020,” the news report said. Yet a pragmatist view advocates that the FATF body may extend Pakistan’s present grey-list status thereby giving the space to take further action to be taken by Pakistan regarding FATF remaining compliance agenda. And hopefully, in the FATF plenary session to be held in June (June-20-26) in China, Pakistan’s name may be removed from the grey-list.
—The writer, an independent ‘IR’ researcher-cum-analyst based in Pakistan, is member of European Consortium for Political Research Standing Group on IR, Critical Peace & Conflict Studies, also a member of Washington Foreign Law Society and European Society of International Law.