With Pakistan not meeting its obligations to control money laundering and terror the Financial Action Task Force (FATF), the terror-financing watchdog is all set to keep the country on its Grey List till February 2020. A formal announcement in this regard is expected soon.
In a major development on Tuesday, the Paris-based FATF decided “in principle” that Pakistan will remain on its Grey List till February 2020 and directed the country to take “extra measures” for the “complete elimination” of terror financing and money laundering.
The meeting of the international watchdog reviewed the steps taken by Pakistan to control money laundering and terror, and observed that Islamabad will have to take further steps on the two parameters in these four months, reported Dawn, a Pakistan-based newspaper.
According to Pakistani media reports, the FATF has linked the blacklisting of the country with “unsatisfactory steps to curb money laundering and terror-financing”.
Pakistan was placed on the Grey List by the watchdog in June 2018 and was given 15 months to complete implementation of a 27-point action plan, failing which it be placed in the blacklist along with Iran and North Korea.
It should be noted that if the cash-strapped nation continues to remain in the grey list, it would become very difficult for the Imran Khan government to get financial aid from global money lenders, including the International Monetary Fund (IMF) and World Bank, further making a more precarious situation for its plunging economy.
China currently holds the current FATF presidency and all eyes will be on Beijing that is an all-weather ally of Pakistan.
What does it mean for Pakistan
What makes FATF potent is the fact that its members include 38 countries and major financial institutions across the globe. Pakistan’s foreign office reportedly said the country would lose at least $10 billion annually if it continued on the grey list.
Being on the blacklist is almost equivalent to international economic sanctions, with serious repercussions. Pakistan is not a member of the FATF while India became an observer in 2006. Four years later, in 2010 it became a full-fledged member.
Diplomatically it placed India at an advantage and lobbying from within appears to have paid off, a factor that Qureshi conceded in conversations with the media. Having placed Pakistan in the intermediate grey list, FATF directed the country to specify clearly how and in what manner it had tightened its financial system to curb terror financing.
Even while Pakistan was preparing itself to show that it was complying with the FATF requirements came the Pulwama attack on February 14 that completely threw it off course. Compounding the situation, the JeM immediately claimed responsibility.
The FATF believes that no terrorist group, like the JeM, can function without access to funds. With the June meeting looming large, for a slippage into the black list to be prevented, Pakistan had to necessarily do something concrete to restore its credibility and hope to get let off the hook by the FATF. In addition, the United States, United Kingdom and France have also persevered with the move to designate Azhar and back India at the FATF because of strained relations with Pakistan since the 9/11 terror attacks.
Successive US governments, for instance, have expressed anger at Islamabad’s perceived support of the Taliban and the Haqqani group, both of which have been responsible for attacks on Western troops across the border in Afghanistan. The implications are ominous for Pakistan which while suffering the consequences of terrorism in its own soil has also been accused of failing to curb armed groups functioning from its territory that have created havoc in India and Afghanistan.
The Imran Khan government seems to have read the writing on the wall, and hopefully some peace will now prevail in the neighbourhood.