The decision by the Financial Action Task Force to take Pakistan off its “grey list” shows both the possibilities and limitations of this international body. The FATF’s mandate is to check global money laundering and prevent the misuse of international financial channels and instruments for terrorism and criminal activities. Pakistan, where the proliferation of terror groups and charities and non-government organisations fronting for these groups is well known, has been a prime candidate for increased monitoring by FATF through the last two decades. From around 1998, the US began deploying two international mechanisms in its fight against terror. FATF was one, while the other was the system of designation of terrorists in a global list under the UN Security Council resolution that also required states to implement sanctions against them. The UNSC designations embarrassed states hosting these entities/individuals, but did not put enough heat on them to comply with the requirements.
The FATF, on the other hand, was more effective on the ground. The tightening of banking regulations to comply with FATF monitoring requirements affected every Pakistani with a bank account, and extended the liability for the state’s dalliance with terrorist groups to its citizenry. Though the FATF does not sanction states, being placed on its grey list is not just shaming but also has other real consequences, such as impacting a government’s access to international finances, including assistance from multilateral agencies and from private lenders. Pakistan could duck compliance only at the risk of economic pain, and the possibility, though remote, of being put on a “black list”. It put off the conviction of LeT boss Hafiz Saeed, and the jailing of Sajid Mir, but understood that it had to finally go through with both actions to get off the grey list.
The FATF cast of 39 members bring to the table their geopolitical predilections, friendships and rivalries. Clearly, the chief influencers in the body, including the US, and friends of Pakistan such as China, have concluded that the grey listing of Pakistan has run its course. While four years on the so-called grey list have forced Pakistan to scale down cross-border terror, the freedom of JeM chief Masood Azhar shows that its security establishment is yet to pull the plug definitively on terror as a means of inflicting harm on India. Delhi has sought to flag this through proposals at the UNSC for the designation of the LeT’s Abdul Rehman Makki and more recently, of Saeed’s son Talha Saeed, and LeT deputy head Shahid Mehmood. India’s interests lies in playing the long game in these diplomatic battles with the goal of making the region more stable and secure.
