If there is one entity that Pakistan genuinely fears, it is the Financial Action Task Force (FATF). The Paris-based FATF has been giving Islamabad nightmares ever since it came under global crosshairs for its purported funding and political support to groups deemed terrorists by the United Nations.
Pakistan may have got a breather on Friday (October 18) when the FATF gave the Imran Khan government four months’ time to comply with its demand: not only to back off from supporting these terror groups, but also provide evidence that it had done so.
The FATF placed Pakistan on the grey list, meaning its conduct was under watch, in June 2018 and gave time till October 2019 to comply with its rule, else it would go into the blacklist. Iran and North Korea are already part of the blacklist. At the meeting on Friday, Pakistan got an extension till February 2020.
Out of 27 parameters, Pakistan was reportedly non-compliant in 22. With regard to effective action in 11 parameters, Islamabad was deemed to be low on all but one of them. The friendly intervention by China, Turkey, and Malaysia (a minimum of three countries are needed to thwart a decision) helped Pakistan remain on the grey list for four more months.
Set up as an inter-governmental organisation in 1989 following a decision at the G-7 summit that year, the task force aims to combat money laundering, terror financing and prevent the proliferation of weapons of mass destruction. Of the 39 member-countries in the task force, India became an observer in 2006 and a full member in 2010.
Since then, successive Indian governments have lobbied hard among fellow members to penalise Pakistan for its support to Kashmiri anti-India groups, the result of which is being seen now.
Pakistan has also frequently angered the United States for its tacit support to groups like the Haqqani and the Taliban in their insurgency against the central government in Kabul. The US has been unable to counter these groups effectively, with many top officials in Washington blaming Islamabad’s support as a reason for their ability to continue fighting regular Afghan and coalition forces in Afghanistan.
The reason for Pakistan’s fear can be understood by the serious consequences it will have in its international monetary dealings, high levels of scrutiny and the way international funding will be restricted if it does not comply with FATF directives. Iran and North Korea are already experiencing the pain associated with being on the blacklist.
According to reports, several meetings and consultations have been held within the government in Pakistan since last June to try and figure out ways and means to deal with the FATF demand. Officials have publicly warned that if the country finds itself in the blacklist, it will affect billions of dollars in trade and other finance-related activities of the country with the rest of the world.
Days before the latest FATF meeting, four aides of UN-designated terrorist Hafeez Saeed were arrested. This may have had a salutary effect on the meeting, going by the positive reactions to the move from a few countries including the United States. Saeed has been in prison since July on charges of money laundering and terror financing.
Given the fractious nature of Pakistan’s internal politics where the government, for all practical purposes, shares power with the military and the intelligence agency, ISI, it appears to be an uphill task for the Imran Khan government to stave off the possibility of landing in the blacklist — unless the military and the ISI too share the concern of the government and agree to cooperate in complying with the FATF’s remaining 22 points to combat money laundering and terror financing.