In a four-month breather for Islamabad, the Financial Action Task Force (FATF) Friday decided to keep Pakistan on the Grey List, but warned that it will be put on the Black List if it does not control terror funding by February 2020.
The global financial watchdog’s decision comes after India mounted a diplomatic offensive against Pakistan for its blacklisting as it had not met a majority of its commitments on terrorist financing and money-laundering. While Delhi led the charge, France, the US and European Union countries also pitched in.
The FATF after it’s five-day plenary, which concluded in Paris Friday, noted that Pakistan addressed only five of the 27 tasks given to it to control funding to terror groups like the Lashkar-e-Taiba and Jaish-e-Mohammad — both are responsible for a series of attacks in India.
The decision means Pakistan has been given time until February 2020 to fulfil its commitments or risk being blacklisted.
According to sources, an objective assessment of Pakistan’s progress in implementing its action plan was obtained, including in connection with situations of other countries. Apart from some action taken by Islamabad, the FATF noted the insufficiency of Pakistan’s implementation as “serious concerns”.
According to French diplomatic sources, the immediate blacklisting of Pakistan did not garner the consensus of all FATF members as the most effective response.
The compliance requirement is quite strict — it asks for “significant and sustainable progress”, “across the range”. “It is clear that the FATF will take action if progress cannot be established,” the source said.
Sources also said that there is an explicit threat of being blacklisted, if applicable. If Pakistan continues on the Grey List or gets put in Dark Grey List, it will be very difficult for the country to get financial aid from the IMF, the World Bank and the European Union, making its financial condition more precarious.
Such action could include calling upon global financial institutions to give special attention to business relations and transactions with Pakistan. This language is the same used for Iran, which is already on the Black List.
The FATF discussed all jurisdictions, which are under review, including Pakistan and there was consensus on Pakistan, with its poor performance on the 27-point action plan, despite expiry of its 15-month timeline.
“It was noted that Pakistan was able to address only five out of 27 items. It was unanimously decided to express serious concern with overall lack of progress in addressing its transnational terror funding risks,” the official said.
Pakistan was placed on the Grey List in June last year and given a plan of action to be completed by October 2019 or face the risk of being placed on the black List along with Iran and North Korea. China, Turkey and Malaysia are learnt to have resisted India’s efforts.
The Indian Express has learnt that the China and Turkey pushed to give Pakistan a “little more time” to fulfil its commitments. Saudi Arabia has not yet committed to giving support or oppose the Indian effort.
At the meeting, India is learnt to have asked FATF members to blacklist Pakistan citing the recent example that Islamabad has allowed Mumbai terror attack mastermind Hafiz Saeed to withdraw funds from his frozen accounts.
Prime Minister Narendra Modi and External Affairs Minister S Jaishankar had meetings with their counterparts of many FATF member countries over the last few weeks, especially at the UN General Assembly in New York.
While Modi had met leaders from Belgium, France, US, UK, Italy, New Zealand, South Africa among others at the UN, Jaishankar had met his counterparts from Australia, Brazil, Canada, China, Germany, Italy, Netherlands, Singapore, Turkey, Japan at the UN in New York. He has also met his counterparts from the two regional organisations in the FATF – the GCC and the EC.
Earlier, Jaishankar met leaders from Finland – on his way to New York – and his counterparts from France, Germany, Canada. NSA Ajit Doval and Jaishankar had also visited Russia separately.