financial action task force and pakistan

Written by Muhammad Hamza Tanvir 11:47 am Articles, Pakistan, Published Content

The Financial Action Task Force and Pakistan: A Political Agenda

Despite complying and delivering on 26 of the 27 points of the FATF’s action plan, Pakistan finds itself caught in a spider web, spun by the United States and India. The FATF has now issued a new six-point action plan for the country, leaving Pakistan in a bind. The FATF’s discrimination against Pakistan raises concerns about the impartiality of the intergovernmental body.
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Mr Muhammad Hamza Tanvir is an independent journalist and a political analyst, focusing primarily on regional and global strategic and political issues. He has authored numerous articles for different national and international publications.

On the Grey List…Again

Pakistan has again been retained on the grey list – also known as the increased monitoring list – of the Financial Action Task Force (FATF) until further progress despite the country’s compliance on 26 out of 27 points of the action plan. The plenary meeting is scheduled for October 2021 and Pakistan’s progress will once again be judged in that meeting.

Although many in the country were confident that Pakistan would succeed to be whitelisted in the recent meeting because of its unprecedented performance on the action plan, the decision of the watchdog posits that the country has much to do. The country was placed on the grey list of the watchdog based on a resolution moved by the United States and its allies in June 2018.

Pakistan was tasked with the most challenging and comprehensive action plan ever as claimed by Federal Minister Hammad Azhar. In the recent decision announced by the FATF, on June 25, the watchdog has issued a new six-point action plan for the country to curb the deficiencies which were identified in the Mutual Evaluation Report (2019) of the Asia Pacific Group.

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Pressure on Pakistan by the Financial Action Task Force

The recent decision by the watchdog has given rise to suspicions about the credibility of the FATF. Some governmental officials claim that the decision was taken to pressurize Pakistan for achieving the vested strategic interests of some influential world powers in the region. It is also claimed that the country is paying the price of its refusal to provide bases to the US.

The claims about the politicization of FATF could be pertinent, as China had once warned the western powers to refrain from using FATF and other global organizations for achieving their political goals. Furthermore, the claims about the partiality of the watchdog also gain strength from the argument that previously many countries had been whitelisted on far less performance as compared to Pakistan.

Many in Pakistan also question why India is not placed in the grey list of the watchdog despite sheer evidence of money laundering, terror financing, and especially the recent incidents of uranium theft and its selling in the black market. Although there are pieces of evidence of the politicization of the Financial Action Task Force, Pakistan’s compliance with all the points of FATF will be lucrative for the country in many ways.

Previous Instances of Pakistan Being on the Grey List

This is not the first time that the country has been on the grey list of the financial watchdog. Pakistan, for the first time, was greylisted in the year 2008. The lack of appropriate legislation in identifying terrorist financing and the confiscation of their assets was the main concern of the financial watchdog at that time.

For the second time, the country was grey-listed in 2012 for its failure to effectively curb money laundering and terrorist financing. Pakistan, however, flourished to be white-listed in 2015. The recent greylisting of the country was the corollary of a campaign launched by India, the United States, and their European allies in 2018. Although the country has been on the grey list previously, this time the country is facing the toughest action plan.

Islamabad was quite confident that it would succeed in getting off the grey list, but the decision has proved all optimistic assumptions wrong. The remaining single point of the action plan is perceived to be the most significant one. It encourages the country to demonstrate the terror financing investigations and prosecutions targeting senior leadership and commanders of the UN-designated terrorist groups.

The recent bomb attack in Lahore on the very day of the meeting of FATF also depicts the involvement of a foreign hand to malign Pakistan because the terrorists arrested in the aftermath of the attack are linked with RAW – the Indian spy agency – and NDS – the spy agency of Afghanistan.

The Politicization of the Financial Action Task Force

After the recent decision of FATF about retaining Pakistan on the grey list, Foreign Minister Shah Mehmood Qureshi lambasted the watchdog and questioned its credibility and impartiality. He iterated that it is yet to be determined if the watchdog is a technical forum or a political one and whether it is being used to achieve some vested political rationales.

He further stated that in his personal opinion there was no reason to keep Pakistan on the grey list. He also directly blamed India for misusing the forum for political purposes and committing persistent propaganda against Pakistan. This might seem like the response of a victim country, but the reality is that he is not alone in raising such questions.

In the past, China also blamed the forum as being used as a tool by some influential countries to achieve their political objectives. In 2019, the Chinese deputy director general of Policy Planning for Asian Affairs at China’s Foreign Ministry, Mr. Yao Wen, stated that China didn’t want the watchdog to be used as a political tool, as some countries were pursuing their political agenda in a bid to blacklist Pakistan.

He further maintained that his country, China, had communicated to the United States and India that FATF was not meant to blacklist any country, rather it was supposed to support the countries to take action against terror financing. Similarly, in the recent decision of the FATF forum, the statements made by the president of FATF also substantiate the argument that the watchdog is being used for political purposes.

In his decision, he made it clear that the decision of delisting Pakistan would be taken by the Financial Action Task Force after all the items on both the action plans are fulfilled by the country. Surprisingly, he confirmed that even the compliance on the only remaining point of the action plan would not guarantee the delisting of Pakistan and that would only be possible if the country also, simultaneously, implements the Asian Pacific Group’s action plan.

He further stated that FATF reserved the right to determine Pakistan’s compliance by conducting an on-site evaluation. These remarks make it crystal clear that the forum was being used as a political tool against Pakistan by the United States and its allies. Another question about the credibility of the Financial Action Task Force is why it has not grey-listed India despite conclusive evidence of its involvement in terrorist activities in Balochistan and other areas of Pakistan.

It seems like the watchdog has turned its eyes blind when it comes to the question of India. The recent incident of uranium theft and its sale in the black market in India is a clear instance of how weak India is about controlling terrorism, but, surprisingly, no international institution has greylisted it or demanded any sort of action against it. It shows how economic and geo-strategic concerns of the West maneuver the decision of international organizations.

Similarly, why does the FATF not take any action against the safe-haven countries for money laundering like Switzerland, Norway, Sweden, US Virgin Islands, the British Virgin Islands, and Denmark? These countries are the hub of black money, for instance, in Switzerland, such laws are made that the identity of the owner of the bank account cannot be revealed. This provides the money launderers with the privilege to save their black money without being noticed.

If the watchdog wants to curb money laundering completely, it needs to target the root of the problem which is only possible by coercing the safe haven countries to reveal the identity of the account holders and their source of earning that money. All these facts point towards the politicization of the FATF forum. This politicization of the watchdog and the statements made by the president of the Financial Action Task Force leave Pakistan in uncertainty about the outcome.

Will Pakistan Be White-listed Soon?

The decision of the watchdog to keep the country on the grey list despite its unprecedented compliance will have serious economic ramifications for Islamabad. The country has already faced a loss of $38 billion since the year 2008 due to the greylisting by FATF. If the governmental officials think that the watchdog is politicized by some influential countries, they can only avoid being blacklisted by complying with all the points of the action plan so that the watchdog and its patron can not have any excuse to do so.

Meanwhile, the political elite, from both the government and opposition benches, must cooperate for the greater good of Pakistan. The politicians involved in money laundering must also be subjected to appropriate punishment and their supporters must realize the damage that their leaders are inflicting on the countries.

There is no doubt that the United States, India, and their allies are coercing Pakistan so that the country may submit to their desires, but Pakistan on its part should not show any kind of strategic flexibility. Otherwise, the country will have to pay a much bigger price in terms of a detrimental effect on the CPEC in this era of neo-imperialism.

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