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Pakistan and the FATF Grey List

It has become almost a routine now that the Paris-based Financial Action Task Force (FATF) praises Pakistan for its hard work to meet the criteria to come out of its so-called grey list but, at the same time, keeps the country’s status unchanged. This saga was repeated on October 21 when the FATF announced that Pakistan will remain on its increased monitoring list, also called the grey list. This all happened at a time when there were great expectations in Islamabad that the country would be taken out of the grey list as it has met almost all conditions.
Announcing the decision, FATF President Dr Marcus Pleyer said that Pakistan had to complete two concurrent action plans with a total of 34 items. “It has now addressed or largely addressed 30 of the items,” he said, adding that of the 27 action points agreed under the June 2018 plan, 26 had been implemented – a position that remained unchanged since then. Although four out of the seven action plan items are now addressed or largely addressed, the remaining condition of the June 2018 plan is the most crucial one.
The FATF announcement read: “Pakistan should continue to work to address its other strategically important AML/CFT [anti-money laundering and terrorist financing] deficiencies, namely by providing evidence that it actively seeks to enhance the impact of sanctions beyond its jurisdiction by nominating additional individuals and entities for designation at the UN.”
It added that Islamabad should demonstrate an increase in money laundering investigations and prosecutions and that proceeds of crime continue to be restrained and confiscated in line with the country’s risk profile, including working with foreign counterparts to trace, freeze and confiscate assets.
Although FATF President said that the entire process of scrutiny and assessment was on technical parameters, and there was no element of bias in it, the perception in Pakistan that India in particular, and Western nations in general, have been applying pressure on Islamabad through the FATF/APG forum is not wrong. We have seen the watchdog move the goalposts away in recent months. The statements from India to this effect confirm these perceptions. This perception is further augmented by the fact that some nations were let off the hook in the past for doing far less than what Pakistan accomplished in the drive to control illicit flows of money over the last three years.
Western nations and India are pressuring Pakistan through the FATF forum to target eight groups – the Afghan Taliban, Jamaat-ud-Dawa (JuD), Haqqani Network, Jaish-e-Mohammed (JeM), Lashkar-e-Taiba (LeT), Falah-e-Insaniyat Foundation, al-Qaeda and Islamic State. These demands have become unrealistic in essence, because some of these entities and their leaders are, interestingly, now part of the interim Afghan government. That makes it impossible for Pakistan to move against them. The FATF is being used to pressure Pakistan to tame some of the militant and proscribed outfits that are out of its de jure reach.
How can Islamabad prevail over Tehrik-e-Taliban Afghanistan, Al Qaeda and ISIS, and many of their affiliates who are on the run and do not maintain books with any accredited institution in Pakistan?
So, keeping Pakistan in the grey list is indubitably disappointing. That this decision seems to be more politically motivated than on actual merits is evident. It is no coincidence that the Indian foreign minister released a statement asserting that the Narendra Modi government had ensured Pakistan remained on the grey list, vindicating Pakistan’s long-standing stance on “India’s negative role” in the global financial watchdog.
The good point, nonetheless, is that Pakistan is complying, and has every intention to come out of the woods. Federal Minister Hammad Azhar hopes Pakistan would complete the required process in a couple of months, and stand out uprightly. Reports testify Pakistan has smartly put its house in order, convicted more than 150 people in money-laundering, and come down hard on terror financing channels – an aspect acknowledged by FATF and international donors. This progression was more than enough to take the country off the grey list, but it seems perceptual enigmas prevail at times. FATF members must recognise that Pakistan officially calls for acting against flight of capital, and advocates a mechanism to curb such a tendency. Pushing Pakistan to the wall with a hidden agenda is regrettable. FATF should take note of its loud thinking.
The writer is a student at UMT, Lahore.