Pakistan could next week find itself on the international money laundering and terrorism financing watch list unless it satisfies the Financial Action Task Force (FATF) – an inter-governmental counter-illicit financing watchdog – that it has done enough to overcome deficiencies in its implementation of sanctions against groups and individuals proscribed under UN Security Council Resolution 1267.
Only a diplomatic miracle, it is believed, can save Pakistan from being put in the uncomfortable company of the ‘monitored and high risk countries’.
The financial community is anxiously watching as the clock ticks towards the FATF plenary, which begins this Sunday (Feb 18) in Paris. The United States, United Kingdom, France and Germany have together nominated Pakistan for ‘grey listing’. In simpler terms this means putting it on the unenviable list of states found deficient in implementing the international standards to check illicit financing.
Pakistan has been narrowly escaping grey listing since last year by taking tentative measures.
The government had, ahead of last year’s FATF meetings, placed Hafiz Saeed under protective custody in January and banned one of his lesser known outfits, Tehreek Azadi Jammu and Kashmir (TAJK) in June. The steps only helped Pakistan get temporary reprieve.
The threat this time around is, however, graver and so have been the measures to pre-empt the eventuality more serious—unprecedented to say the least. The government amended the anti-terrorism legislation through a presidential ordinance to include all UN listed groups and individuals on the domestic list of proscribed organizations and persons. Effectively that means Hafiz Saeed and a number of his colleagues have been proscribed and so have been his organizations, the Jamaat-ud-Dawa (JuD) and Falah-e-Insaniat Foundation (FIF).
Media reports suggest government agencies have already acted to take control of these entities. Importantly, the federal cabinet earlier in the week approved new rules for seizing assets of proscribed groups.
This all sounds unbelievable. The government had always enthusiastically resisted proscription of JuD and FIF, although both charities were kept on the watch list for years due to international pressure. The unrelenting pressure from the outside world has now forced Pakistan to unwillingly designate these groups as banned within the country.
Pakistan’s predicament reminds me of the ancient tale of a condemned man, who was asked to choose between hundred onions and hundred lashes as his punishment and he ended up eating all the onions and receiving the full number of lashes. But, Pakistan’s quandary is even worse. Despite doing the actions taken so far it still has to earn the credibility to win the world’s trust.
At the Paris meeting, FATF will undertake a technical review of the steps Pakistan ought to have taken against money laundering and terror financing particularly with regards to legislative measures and actions against Lashkar-e-Taiba, JuD and FIF. Pakistan would be judged on the basis of a ‘compliance report’ that would be submitted by the government. The last FATF meeting in Buenos Aires in Nov 2017 had sought the report. The government had on that occasion also made certain commitments.
The government believes that the FATF review and call for grey listing was nothing but a political witch-hunt for not submitting to US and Indian dictates. This has been publicly stated at the highest level by the National Security Committee, which cautioned against the politicization of the process. Although one cannot deny the deficiencies on Pakistan’s part, but the Pakistani narrative isn’t unfounded either. The motion by the US and its allies coincide with Trump’s ramped-up pressure against Islamabad for allegedly not acting against terror sanctuaries.
India has been the motivating force behind the move, but it is being carried forward by US and Britain, who were later joined in by Germany and France. Pakistan has been undertaking a diplomatic effort to reach out to countries that it thinks could be supportive and ready to listen to its explanations. In this regard, delegations have been sent to Russia, Turkey, and some Middle Eastern and European capitals. Three votes are needed to block the move. Pakistan already has one – China – and would be needing two more countries in the 37-member body.
Prime Minister’s Adviser on Finance Miftah Ismail sounded optimistic about the diplomatic effort. “We are also quite hopeful that even if the US did not withdraw the nomination that we will prevail and not be put on the watch list,” he was quoted by Reuters as having said.
The outcome would become public by next Tuesday when the plenary meeting concludes. It would be a huge diplomatic success, if Pakistan succeeds in blocking the US-led move for its grey listing. Otherwise, Pakistan’s economy would suffer a big setback. Inclusion in the grey list means a substantive increase in the cost and time of financial transactions with the rest of the world because then transactions undergo a review. The listing signals to banks around the world to be cautious in transactions with the country concerned.
Inclusion on the grey list wouldn’t be something new for Pakistan either. It has already remained on it from 2012-15. But, either way, Pakistan is due for an extensive FATF review, which would be commencing from April this year and would continue for about 18 months. This means being in the spotlight till Oct-Nov 2019 in any case.
The writer is a freelance journalist based in Islamabad and can be reached at mamoonarubab@gmail.com
Only a diplomatic miracle, it is believed, can save Pakistan from being put in the uncomfortable company of the ‘monitored and high risk countries’.
The financial community is anxiously watching as the clock ticks towards the FATF plenary, which begins this Sunday (Feb 18) in Paris. The United States, United Kingdom, France and Germany have together nominated Pakistan for ‘grey listing’. In simpler terms this means putting it on the unenviable list of states found deficient in implementing the international standards to check illicit financing.
Pakistan has been narrowly escaping grey listing since last year by taking tentative measures.
The government had, ahead of last year’s FATF meetings, placed Hafiz Saeed under protective custody in January and banned one of his lesser known outfits, Tehreek Azadi Jammu and Kashmir (TAJK) in June. The steps only helped Pakistan get temporary reprieve.
The threat this time around is, however, graver and so have been the measures to pre-empt the eventuality more serious—unprecedented to say the least. The government amended the anti-terrorism legislation through a presidential ordinance to include all UN listed groups and individuals on the domestic list of proscribed organizations and persons. Effectively that means Hafiz Saeed and a number of his colleagues have been proscribed and so have been his organizations, the Jamaat-ud-Dawa (JuD) and Falah-e-Insaniat Foundation (FIF).
Media reports suggest government agencies have already acted to take control of these entities. Importantly, the federal cabinet earlier in the week approved new rules for seizing assets of proscribed groups.
This all sounds unbelievable. The government had always enthusiastically resisted proscription of JuD and FIF, although both charities were kept on the watch list for years due to international pressure. The unrelenting pressure from the outside world has now forced Pakistan to unwillingly designate these groups as banned within the country.
Pakistan’s predicament reminds me of the ancient tale of a condemned man, who was asked to choose between hundred onions and hundred lashes as his punishment and he ended up eating all the onions and receiving the full number of lashes. But, Pakistan’s quandary is even worse. Despite doing the actions taken so far it still has to earn the credibility to win the world’s trust.
At the Paris meeting, FATF will undertake a technical review of the steps Pakistan ought to have taken against money laundering and terror financing particularly with regards to legislative measures and actions against Lashkar-e-Taiba, JuD and FIF. Pakistan would be judged on the basis of a ‘compliance report’ that would be submitted by the government. The last FATF meeting in Buenos Aires in Nov 2017 had sought the report. The government had on that occasion also made certain commitments.
The government believes that the FATF review and call for grey listing was nothing but a political witch-hunt for not submitting to US and Indian dictates. This has been publicly stated at the highest level by the National Security Committee, which cautioned against the politicization of the process. Although one cannot deny the deficiencies on Pakistan’s part, but the Pakistani narrative isn’t unfounded either. The motion by the US and its allies coincide with Trump’s ramped-up pressure against Islamabad for allegedly not acting against terror sanctuaries.
India has been the motivating force behind the move, but it is being carried forward by US and Britain, who were later joined in by Germany and France. Pakistan has been undertaking a diplomatic effort to reach out to countries that it thinks could be supportive and ready to listen to its explanations. In this regard, delegations have been sent to Russia, Turkey, and some Middle Eastern and European capitals. Three votes are needed to block the move. Pakistan already has one – China – and would be needing two more countries in the 37-member body.
Prime Minister’s Adviser on Finance Miftah Ismail sounded optimistic about the diplomatic effort. “We are also quite hopeful that even if the US did not withdraw the nomination that we will prevail and not be put on the watch list,” he was quoted by Reuters as having said.
The outcome would become public by next Tuesday when the plenary meeting concludes. It would be a huge diplomatic success, if Pakistan succeeds in blocking the US-led move for its grey listing. Otherwise, Pakistan’s economy would suffer a big setback. Inclusion in the grey list means a substantive increase in the cost and time of financial transactions with the rest of the world because then transactions undergo a review. The listing signals to banks around the world to be cautious in transactions with the country concerned.
Inclusion on the grey list wouldn’t be something new for Pakistan either. It has already remained on it from 2012-15. But, either way, Pakistan is due for an extensive FATF review, which would be commencing from April this year and would continue for about 18 months. This means being in the spotlight till Oct-Nov 2019 in any case.
The writer is a freelance journalist based in Islamabad and can be reached at mamoonarubab@gmail.com