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PAKISTAN ON THE GREY LIST

  • KIPS CSS Admin
  • July, 2018
  • 568
  • Editorial

Now Pakistan has officially been placed on a terrorism financing watchdog’s grey list despite the efforts made by diplomatic circles.  It is said that the Financial Action Task Force (FATF) took this decision during a plenary meeting in Paris. That blamed that the country had not met the required limits to curb the terror financing on its soil. For some, this act is a conspiracy against Pakistan while other argue that the country should need to do more in this regard. The caretaker Finance Minister Dr. Shamshad Akhtar was quick to respond by urging the FATF to remove Pakistan from its grey list.

No doubt Pakistan has taken steps to curtail money laundering and terror financing and during the FATF meeting Pakistani delegation informed about these steps. But these efforts might have been too little and too late for the global money-laundering watchdog. Pakistan has banned some groups and has also seized their assets. The said groups’ open operations had been headache for the country and they gave a bad name to the country in the comity of nations. This year, for the first time, the decision to place Pakistan on the grey list was made in February 2018 in a plenary meeting comprising 37 nations. China, Turkey and Saudi Arabia opposed the United States-led move to place Pakistan on the watchlist. But the US pushed for an unprecedented second discussion on Pakistan, held on February 22. The USA convinced Riyadh to give up its support to Pakistan in return for a full FATF membership. This left only two – China and Turkey – in the Pakistan camp.

FATF is a global body that combats terrorist financing and money laundering. Established in 1989, the FATF is an inter-governmental body to combat money laundering, terrorist financing and other related threats. There are two kinds of lists maintained by FATF: Grey and Black. The countries falling in the former are the ones that have deficiencies in their AML/CTF regimes but they commit to an action plan to address these loopholes, and the latter are the ones that do not end up doing enough.

Prior to February meeting, President of Pakistan issued Anti-Terrorism Ordinance 2018 and the Securities and Exchange Commission of Pakistan’s (SECP) made efforts in the shape of Anti Money Laundering and Countering Financing of Terrorism Regulations, 2018. The National Security Committee’s (NSC) held meeting to move forward in this regard but in vain.

Now Pakistan is in the grey list of FATF. It means that Pakistan's financial system is considered a risk to the international financial system since it might have "strategic lacunas” which let terror financing and money laundering go unchecked in one way or other. Now the country will be directly scrutinised by the financial watchdog until it is satisfied by the measures taken to curb terror financing and money laundering. Nobody knows exactly what FATF wants from Pakistan- thanks to the cloudiness of FATF’s operations.

It would be instructive to survey that the country had already been placed three years on the 'grey list' between 2012 and 2015. However, that designation did not affect its ability to float international bonds, borrow from multilateral bodies, receive or send remittances or conduct international trade. During an address in National Assembly in March 2018, the then finance minister Miftah Ismail claimed that placing on the grey list was no embarrassment for Pakistan since it would not affect the economy. The veracity of his claim remains to be seen in the days to come.

There are critics of Pakistan’s ‘best efforts’ against the terror outfits and financing methods. They argue that the UN listed terror groups in Pakistan are directly or indirectly contesting the elections this month. It is said that some banned leaders and their affiliates are still active behind the curtains. In the same way, a religious dharna group’s activities have put a question upon the ‘best efforts’.

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