Pakistan and FATF – The One That Got Away


UN Sanctioned JeM Leader
Masood Azhar UNSC Sanctioned Leader of JEM [Source Wkiipedia]

After four years, Pakistan is expected to be removed from the FATF grey list with a visit by the team of the organization for physical inspections to Islamabad in the coming months.

While much progress has been made particularly in sentencing terrorist leaders as Hafeez Saeed, others as Jaish e Mohmmad head Masood Azhar continue to remain at large, thus Pakistan seems to have got away with this one? Here is a review-


Jubilation in Pak


There is much jubilation in Pakistan’s strategic circles that the Financial Action Task Force (FATF) the global money laundering and terrorist financing watchdog, has accepted that the country has completed two action plans covering 34 items resulting in qualification for an onsite inspection to verify the implementation of reforms on Anti Money Laundering and Countering Financing of Terrorism commitments.


This could lead to Pakistan being removed from the, “Jurisdictions under Increased Monitoring,” of the FATF informally known as the Grey List. In the June meet in Germany Malta achieved this distinction.


The FATF remarked that, “In particular, Pakistan demonstrated that TF investigations and prosecutions target senior leaders and commanders of UN designated terrorist groups and that there is a positive upwards trend in the number of ML investigations and prosecutions being pursued in Pakistan, in line with Pakistan’s risk profile”.


The prosecution is with reference to imprisonment of Hafeez Saeed head of the Laskar e Taiyyaba which is implicated in the Mumbai 26/11 terrorist attack amongst others.


The FATF also remarked that, “necessary political commitment remains in place to sustain implementation and improvement in the future”. The FATF is expected to conduct an onsite visit to Pakistan based on the COVID 19 situation.


How Pakistan Achieved it?


Pakistan’s Director General (DG) Financial Monitoring Unit (FMU) Lubna Malik highlighted that the country had made steady progress on all points and also importantly as per the News Pakistan, “achieved prosecution and convictions against those involved in terror financing and money laundering. She said that the country also made progress in taking stern action against the leadership of banned outfits to demonstrate its seriousness, which helped convince the FATF to declare the country compliant”.


She said that the FATF did not convey a specific time-frame for an onsite inspection visit, but Pakistan wanted to convince the FATF to dispatch its team as early as possible.


Dawn News in an editorial on June 18 highlights the importance of action against Hafeez Saeed to be the turning point. “Last but not the least, the conviction of the banned Lashkar-e-Taiba chief Hafiz Saeed on terrorism-related charges must also have strengthened Pakistan’s case,” says the Dawn.


Saeed was sentenced to 33 years in Jail on April 08, this year. This could not have been achieved but for the approval of the military given that Saeed was one of the biggest assets of the intelligence agency the ISI.


Reactions in Pakistan


There was much jubilation in Pakistan over the development. Minister for State for Foreign affairs Hina Rabbani Khar remarked in a press conference held in Islamabad on June 18 outlined the due diligence that was carried out to get off the FATF list.


Chief of Army Staff (COAS) General Qamar Javed Bajwa called it a great achievement, “Completion of FATF AML/CFT (anti-money laundering/combating the financing of terrorism) action plans by Pakistan is a great achievement,” the Inter-Services Public Relations (ISPR) said in a statement, quoting the army chief. He complimented the “core cell at the General Headquarters (GHQ)” that steered the national effort of the civil-military team that synergised the implementation of the action plan as per a News International Pakistan Report.


Dawn News in an editorial on June 18 gives credit to the Shahbaz Sharif government effective diplomacy to achieve the final burst so to say and recounts that China and the US supported the removal of Pakistan from the FATF grey list thus achieving this outcome.



What Does it Imply?


Quoting experts the News Pakistan explains that there will be greater access to international funding as the country will be off the grey list and is expected to boost trade, loans and remittances. In general the economic outlook of the country which is seeking External Financing Facility from the International Monetary Fund (IMF) is expected to brighten.


Dawn News editorial on June 18 states, “Once formally removed from the list, the country will see its credit rating improve, giving confidence to foreign investors”.


“Getting off the FATF greylist is a highly technical process, but at some point, the international community needs to recognise Pakistan for the genuine steps it has taken against certain militant groups and their leaders,” Adam Weinstein, a research fellow specialising in Pakistan and Afghanistan at the Quincy Institute for Responsible Statecraft was quoted by the News.


However Weinstein cautioned, “It’s hard to calculate the impact of a grey listing because it incurs repetitional costs, deters foreign investment, and may even reduce consumer spending,” he said.


History of Pak Grey Listing


The Dawn provides details of three times that Pakistan has been on the FATF grey list.

Here is a summary of that report.


Pakistan was on the FATF Grey list for the first time from Feb 28, 2008 to June 2010 for failing to meet the “international anti-money laundering (AML) and combating financing of terrorism (CFT) standards” and was asked to work closely with the Asia Pacific Group to achieve targets.


The second time Pakistan was on the grey list was from Feb 16, 2012 for three years till February 2015 after establishing “legal and regulatory framework to meet the commitments in its action plan”.


In the current phase Pakistan has been on the grey list from June 28, 2018 for failing to act against terror financing.


This is the longest time when the country is on the Grey list as is expected to last at least till October this year or more.


Key Terrorist Leaders Still Remain at Large


Despite jailing Hafeez Saeed, Pakistan can face the flak given that no action to bring UN Sanctioned terrorists leaders as Mohammad Masood Azhar has been taken.


As per UN listing, “Mohammed Masood Azhar Alvi was listed on 1 May 2019 pursuant to paragraphs 2 and 4 of resolution 2368 (2017) as being associated with Al-Qaida for “participating in the financing, planning, facilitating, preparing, or perpetrating of acts or activities by, in conjunction with, under the name of, on behalf of, or in support of”, “supplying, selling or transferring arms and related material to”, “recruiting for”, “otherwise supporting acts or activities of”, and “other acts or activities indicating association with”


Masood Azhar has been on India’s priority wanted list and was sanctioned by the UNSC after repeated attempts by China to block the same were overcome in 2019. He heads the Jaish e Mohammad behind a number of terrorist attacks in India, including the Parliament and Pulwama in 2019.


China is now blocking listing of Abdul Rehman Makki, Deputy leader of the Lashkar e Taiyyaba from UN listing. Clearly if Makki is also listed, Pakistan will be forced to take action against him but delay may lead to getting off the hook after visit of the FATF panel to the country.


India in tandem with the United States and others need to press for action against Masood Azhar before delisting Pakistan from the FATF “Jurisdictions under Increased Monitoring”.


Has there been a political determination not to do so in New Delhi in tandem with Washington remains to be seen?

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