The Financial Action Task Force (FATF) needs to take a hard and objective look at Pakistan’s attempts to leverage “nuisance value” to ensure that the country fully complies with terror financing and money laundering obligations before it can be de-listed, Global Watch Analysis reported.
The FATF, the global money-laundering and terror-financing watchdog, is holding its plenary session from October 21 where it will decide the fate of Pakistan. The country is in grey-list since 2018.
Early this month, the FATF’s Asia Pacific Group (APG) on Money Laundering has kept Pakistan on “Enhanced Follow-up List” for its slow progress on the technical recommendations of the FATF to fight terror financing. Pakistan’s progress has remained unchanged — non-compliant on four counts.
According to a report by Roland Jacquard, Chairman of Roland Jacquard Global Security Consulting (RJGSC), published in Global Watch Analysis, the APG’s latest report of September 2020, based on the evaluation conducted after a year, Pakistan’s report card remained more or less unchanged with the country being able to move one of its partially compliant parameters to fully compliant.
“The APG has a stringent set of monitoring processes while evaluating a country’s compliance with AML/CFT measures. It has a scale of 40 parameters based on which it prepares its evaluation report on any country. These parameters range from the presence of effective laws and supervision to prevent terror financing or money laundering to identifying non-profit organisations that act as fronts for terror groups,” he said.
“In Pakistan’s case, the APG, in its Mutual Evaluation Report in October 2019 had found the country compliant on 1, non-compliant on 4, partially compliant on 26 and largely compliant on 9 of these 40 parameters. In the APG’s latest report of September 2020, based on the evaluation conducted after a year, Pakistan’s report card remained more or less unchanged with the country being able to move 1 of its partially compliant parameters to fully compliant,” he added.
Jacquard said that the APG is a non-political body and its opinion is not binding on the final decision of the FATF, adding that the FATF’s Joint Group Progress Report of October 2020 has taken a more “lenient stance” on Pakistan.
Pakistan is in the FATF’s grey list since June 2018 and the government was given a final warning in February to complete the remaining action points by June 2020. Another review meeting will be held later this month.
The FATF extended the June deadline to September due to the spread of coronavirus that disrupted the FATF plenary meetings.
The country is facing the difficult task of clearing its name from the FATF grey list. As things stand, Islamabad is finding it difficult to shield terror perpetrators and implement the FATF action plan at the same time.
In recent weeks, Pakistan has been trying to paint a picture that it has started the reforms, including the passing of some Bills in order to prevent blacklisting by the FATF.
In late July, Pakistan Financial Monitoring Unit Director-general Lubna Farooq told the National Assembly Standing Committee on Finance that the country is yet to comply with 13 conditions out of the 27-point Action Plan of the FATF, including curbing terror financing, enforcement of the laws against the proscribed organisations and improving the legal systems.
Jacquard said the reason for the FATF leniency is Trump administration’s hurry to leave Afghanistan and therefore its dependence on Pakistan to convince the Taliban for an honourable exit.
“However, since the APG is a non-political body, its opinion is not binding on the final decision of the FATF. As a result, despite APG’s recent evaluation, the FATF’s Joint Group Progress Report of October 2020 has taken a more lenient stance on Pakistan,” he writes.
“As per this group’s assessment, Pakistan has fully complied with 21 of the 27 action points and more or less complied with the remaining 6, thereby indicating that it was more or less on the path of being de-listed. The reasons for this tempered position on Pakistan can only be speculated. The most obvious reason is the Trump administration’s hurry to leave Afghanistan and therefore its dependence on Pakistan to convince the Taliban for an honourable exit,” he adds.
Jacquard said that the important institutions like the FATF should not be allowed to be pressured into taking a decision based on political considerations.
“Whatever may be the case, important institutions like the FATF should not be allowed to be pressured into taking a decision based on political considerations, especially when the ground situation in Pakistan tells an alarming story,” he noted.
A closer look at the Pakistan-based social media accounts conveys a different tale of UN proscribed Pakistani terrorist groups like the Jaish-e-Muhammad, Lashkar-e-Toiba, Jamaat-ud-Dawa, Harkat-ul-Mujahideen and their leaders being allowed freedom of movement and activity in the country, Jacquard highlighted.
While these groups openly collect fund in the name of jihad, the Pakistan government tries to convince the FATF that its recently passed Anti-Money Laundering and Anti-Terrorism laws were evidence of its commitment to act against terror groups, he said.
“The FATF, therefore, needs to take a hard and objective look at Pakistan’s attempts to leverage its nuisance value, in the larger interest of preserving its credibility as a global financial watchdog and ensure that Islamabad fully complies with terror financing and money laundering obligations before it can be de-listed. In this connection, one is reminded of the case of Iceland that was ‘greylisted’ for lesser infractions and took more than a year to get delisted,” he concludes.