Islamabad’s failure to choke the funding of jihadist groups like the Lashkar-e-Taiba and Jaish-e-Muhammad will be discussed at a five-day meeting of the Financial Action Task Force (FATF), an international consortium against terror financing, set to begin in Paris on February 19, diplomatic sources told The Indian Express. The meeting could lead to the initiation of steps that would lead to greater scrutiny of Pakistan-origin transactions across the global financial system.
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Last month, Pakistan submitted a report to the FATF, listing steps it had taken against terror financing and outlining its plans to bring the country into compliance with the United Nations Security Council Resolution 1267, which obliges member states to impose sanctions against designated terrorist groups.
The United States and India, diplomatic sources said, are expected to mount pressure at the FATF meeting by producing evidence that the Lashkar and Jaish continue to openly operate in Pakistan, running political front-organisations and charities that advertise their fundraising activities online and on the streets.
“It is unlikely that there will be any immediate action as a consequence of the meeting,” said a senior diplomatic official, “but there’s certainly going to be mounting pressure on Pakistan to get its house in order, because patience is wearing thin in many capitals.”
Earlier this month, an investigation by The Indian Express revealed that the Lashkar was using proxy bank accounts to raise funds in US dollars for projects in both Pakistan and overseas.
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Islamabad’s report to the FATF, sources said, argues that the country cannot take harsh steps against jihadist groups like the Lashkar, which have a large domestic membership, for fear of provoking a widespread backlash that would destabilise the nation. However, the report promises that Islamabad will continue to slowly squeeze their operations.
Hafiz Muhammad Saeed, the head of the Lashkar and its parent political arm, the Jamaat-ud-Dawa, was placed under house arrest last month, though no criminal charges have been brought against him. The Jamaat-ud-Dawa’s offices in several areas now bear new billboards proclaiming them to belong to an organisation called the Tehreek-e-Azaadi-e-Kashmir.
In a February 2015 statement, the FATF said it had removed Pakistan from a list of countries which were subject to ongoing monitoring, saying the country had “established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in June 2010”.
However, the FATF statement noted that Pakistan was obliged to continue working with the FATF’s Asia-Pacific Group, “as it continues to address the full range of AML/CFT (Anti-Money Laundering/ Countering Financing of Terrorism) issues identified in its mutual evaluation report, in particular, fully implementing UNSC Resolution 1267.”
The core issue that has emerged in 2015-16, diplomatic sources said, is that Pakistan has failed to comply with its commitment to implement Resolution 1267, which obliges countries to freeze all financial assets that could aid listed entities.
Although Pakistan shut down over 2,000 bank accounts linked to the Lashkar, little cash was recovered from these accounts, leading to fears that the account-holders had been tipped off in advance. India and the US have both said that Lashkar-linked military training camps also continue to operate in Pakistan-occupied Kashmir.
Islamabad has battled the FATF over its Anti-Money Laundering/ Countering Financing of Terrorism laws since 2008, when the organisation issued a statement saying “financial institutions should be aware that the remaining deficiencies in Pakistan’s AML/CFT system constitute a ML/FT vulnerability in the international financial system”.
New Delhi, a senior Ministry of External Affairs official said, believes major countries, ranging from the US and European Union members to Australia, have been excessively indulgent of Pakistan’s slow progress in implementing past commitments.
The country was lauded in 2014, for example, for putting in place a new ordinance that allowed it to freeze and seize terrorist assets. The statement, however, referred only to United Nations Security Council Resolution 1373, which does not specify the persons or entities that should be listed, instead giving member-states discretion to blacklist all those deemed necessary to “prevent and suppress the financing of terrorist acts.”
Following two years of diplomatic intervention by India, FATF statements took note of the failure to meet its obligations under Resolution 1267 —the issue the country is faced with now.
FATF, made up of 36 members from the developed countries along with eight regional affiliates who mirror its work and implement its recommendations, has no formal authority under international law. However, countries that have figured on its blacklist have often found