The Financial Action Task Force, an organization initially set up to eradicate money laundering around the globe, has been combating financing of terrorism since its foundation in 2001 but the added emphasis after the rise of ISIL around 2012 has made it one of the primary international organization acting against terror financing. In its recent report, it has announced that most of the measures that Pakistan was required to take have been successfully accomplished but the country still remains on its grey-list – a list of countries that in the FATF’s opinion are subject to increased monitoring. It goes without saying that apart from Iran and North Korea – the only two countries of the world on FATF blacklist, facing economic sanctions due mainly to a lack of progress on the action items and other political considerations – Pakistan is a major country being monitored and, as some would argue, finds itself in the eye of the storm more often than it has perhaps bargained for.
According to a recent FATF communiqué, Pakistan has satisfactorily completed 26 of the 27 action items relating to Anti Money Laundering (AML) and Combating Terror Financing (CTF) that were asked of it by the FATF. Briefly put, the above actions include amendments in laws, especially Anti-Terrorism Act 1997, to curb the funding of proscribed groups, organizations and persons, and improving the procedures of the arrests, period of lawful detention, investigation, and successful prosecution before judicial forums leading to sentencing of those involved in terror financing.
Since major focus of the inter-governmental body has shifted to terror financing but with a continuous emphasis on money laundering, as the latter is a concomitant of the former in the successful running and carrying out of terrorism related activities, countries like Pakistan due to their role in raising and supporting the Taliban have been under a persistent spotlight.
Countries like the US and India, that have been pushing the FATF to closely monitor Pakistan with a history of sectarian and jihadi outfits even predating 9/11, will be watching very closely how far Pakistan keeps its AML and CTF regime well-oiled and operational, and fulfils its pledges to abide by the UNSC Resolutions 1267, 1373 and in particular 2462 which urges all countries to implement FATF Recommendations.
With the recent takeover of Kabul by the Taliban — which interestingly is still a UN designated terrorist organization — the tables seem to have turned as the organization is about to get recognition from a significant number of important countries, if not the entire world. Amidst the euphoria generated by swift and almost bloodless takeover of power, many eyebrows have been raised asking, amongst other questions, if the match was fixed between the US and the Taliban or whether the turn of events was in the US scheme of things, except the lightning speed with which the takeover was completed.
Coming back to the FATF’s recommendations for Pakistan, it has to be said that the measures taken by Pakistan over the years with respect to combating money laundering and terror financing have been impressive. Apart from amendments in laws paving ways for proscribing organizations and persons aimed at weakening and then disabling terror organization inside Pakistan or having Pakistani connection, the State Bank of Pakistan (SBP) has been playing a proactive role in its function as the frontline regulator — a staggering monetary penalty of Rs 1.68 billion was slapped on 15 commercial banks for violations of AML/CTF regulations just during the period between March 2020 and June 2020. Moreover, tax laws, especially those pertaining to funds utilized for purchasing properties, along with anti-terrorism laws giving powers to seize and freeze the alleged proceeds of crime have also been amended for more efficacy.
Another significant step taken in combating terror financing is the introduction of the Code of Criminal Procedure (Amendment) Bill, 2020 which allows Law Enforcement Authorities, with the permission of court, to use undercover techniques like intercepting communications and assessing computer systems etc upon receipt of information to that effect. The list of measures and legal amendments — with a built-in guarantee of due process of law and fair trial under Article 10A of the Constitution — is endless and there have been some successes regarding sentencing of criminals, the convictions of high profile targets like Hafiz Saeed and his close aide Malik Zafar Iqbal being recent examples.
Pakistan has often been criticized for not doing enough as, in the eyes of the outside world, the problem doesn’t lie in the infrastructure and a sound mechanism that, as described above, has been in place for a few years – like the very significant act of raising and training of the Counter Terrorism Department (CTD) on modern and scientific lines – it is the will to execute and operate the system to its full potential in which the state may have been seen lagging behind by the international community. With the Taliban victory in neighbouring Afghanistan, Pakistani social media is abuzz with congratulatory messages and hubristic statements from civilians as well as retired military men cheering the events in Kabul as if Pakistan had just added a fifth province to its federation without firing a shot!
According to most expert analyses, it is not clear how far a Taliban ruled Afghanistan would be able to fulfill its promises of not allowing its territory to be used by worldwide terror organizations which might try to take sanctuary in Afghanistan like they did in the 1990s. Having said that, in the above backdrop and seeing how easily Afghanistan has descended into chaos in the past, there is a distinct possibility that the Pakistani state may decide in its wisdom to put the processes set in motion upon the recommendations of the FATF on the backburner or, at least, slow those down considerably seeing other pressing issues on its plate. Countries like the US and India, that have been pushing the FATF to closely monitor Pakistan with a history of sectarian and jihadi outfits even predating 9/11, will be watching very closely how far Pakistan keeps its AML and CTF regime well-oiled and operational, and fulfils its pledges to abide by the UNSC Resolutions 1267, 1373 and in particular 2462 which urges all countries to implement FATF Recommendations.
Finally, and more critically, the state needs to invest in its criminal justice system which is currently incapable of prosecuting highly technical and sensitive cases of terrorism in general and terror financing in particular. In a nutshell, the system needs to be reformed right from the investigation stage (which is where the rot starts), right up to the end of trial. It is quite inconceivable to think that in an atmosphere where proscribed militant organizations, not to speak of the mainstream religious parties, have been ideologically emboldened after the Taliban takeover of Kabul, you will find trial court judges ready and willing to hand down sentences, despite compelling evidence. The sentence of five and a half years’ imprisonment handed to Hafiz Muhammad Saeed and his aide for financing terrorist operations may seem like a distant memory in times to come as just a one off incident of successful prosecution if the state gets carried away by the images of a seemingly bloody-nosed India and an embarrassed America by the events next door.