Pakistan is likely to be “grey-listed” for terrorist financing and money laundering by the multi-national Financial Action Task Force (FATF) at its plenary meeting in Paris early next week. This will put Islamabad under stringent checks in conducting international financial transactions and affect foreign investments and commercial lending to Pakistan.
The three-day FATF meeting, which starts on Sunday, will consider technical compliance to the requirements of the FATF recommendations agreed upon by Pakistan. Pakistan has fallen short of the requirements by not promulgating legislation to stop money laundering and terrorist financing. It has also not taken action against “proscribed groups” under UN Security Council Resolution 1267, such as the Jamaat-ud-Dawa, Lashkar-e-Taiba, and the Falah-e-Insaniat Foundation which continue to operate freely and raise funds openly within Pakistan. Also Read: Nirmala Sitharaman on Jammu attack: Pakistan will pay… demography suggests local help to terrorists
The FATF is an inter-governmental body established in 1989 that monitors the progress of various countries in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally.
Pakistan, which had earlier been on the FATF “grey list” from 2012 to 2015, has now been co-nominated for grey listing by the United States, United Kingdom, France and Germany in the 37-member grouping. This follows a compliance report submitted by Islamabad on the assurances and promises made after the last FATF meeting in Buenos Aires after India and the US raised the issue of terror financing by Pakistan.
China was the only member country which opposed the FATF’s consensus against Pakistan at the Buenos Aires plenary meeting. Beijing is expected to oppose Pakistan’s nomination to the “grey list” even at Paris but FATF rules require at least three full member countries to block a nomination. The FATF meeting at Buenos Aires noted: “Pakistan made some progress to implement UNSCR 1267. However, concerns related to UNSCR 1267 remain, specifically that designated individuals and entities of concern continue to receive and disperse funds without controls being applied by the competent authorities”.
Sources said Pakistan had been lobbying strongly to garner more support from FATF members like Russia, Gulf Coordination Council, and Turkey at Paris but the outcome of its attempts will only be known next Tuesday at the end of plenary meeting. Significantly, India, which is a full member of FATF, is not among the countries that have nominated Pakistan. The process for nominating Pakistan, sources said, had been led by the US Treasury department which reflects the Trump administration’s hardening position on Pakistan in recent months.
In April, Pakistan is due for a full-scale extensive review or Mutual Evaluation Report (MER) of its financial system by the FATF. This is a detailed process which takes more than 18 months of review, followed by 12 months of analysis. Pakistan will be again in the spotlight at FATF after the completion of MER which will recommend a firm action plan to Islamabad to curb terrorist financing.
The “grey list” has countries FATF regards as having inadequate provisions in place to combat money laundering and terror financing and are subject to the FATF’s monitoring process. The black list includes either countries which have “strategic deficiencies” with respect to these provisions (Bosnia and Herzegovina, Ethiopia, Iraq, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, Vanuatu, Yemen) or “high-risk and non-cooperative jurisdictions” such as North Korea and Iran.
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