FATF decision-biased and politically motivated | By Rashid A Mughal

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FATF decision-biased and politically motivated


FATF decision last week to keep Pakistan on greylist was infuriating and received with much surprise and astonishment.

Many expected it due to the geo-strategic and geo-political developments going around in Asia, particularly in our neighbourhood.

The non-fulfilment of western powers desire for using Pakistan’s territory for airbases and military installations and firm stand taken by the government in refusing to succumb to pressure may be one of the major reason why Pakistan was not removed from the grey list despite action taken on 27 out of 28 items on which FATF wanted Pakistan to act and show progress.

It may be recalled that Pakistan was given a 28-point wish-list and asked to comply with all.

Pakistan complied with 27 items yet it was not removed from grey-list during the last week’s meeting of the global watch dog.

Pakistan rightly termed the decision as politically motivated, not based on facts and ground realities and biased to please certain big power players and our hostile neighbours.

Complying with 27 points out of 28 was a big effort on the part of Pakistan and every Pakistani was hopeful that this time FATF will be impartial but its decision to keep Pakistan still on grey list has come as a big disappointment.

The FATF during its plenary session kept North Korea and Iran as the only two countries on its blacklist but added four new places to its watch-list for increased monitoring, according to Pleyer.

The countries added to the grey list are Morocco, Burkina Faso, Senegal and the Cayman Islands.

The Financial Action Task Force (FATF) is an inter-governmental decision-making body. It was established in 1989 during the G-7 summit in Paris to develop policies against money laundering.

It works to generate the political will to bring about national legislative and regulatory reforms in money laundering.

It has also started dealing with virtual currencies. FATF sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering and works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.

Though the purpose of establishing FATF was to impartially monitor money laundering and terror financing, recent events and decisions it took, smack more of being biased and politically motivated whereas it is supposed to be independent, un-biased and non-political.

Under the German Presidency of Dr Marcus Pleyer, delegates representing 205 members of the Global Network and observer organisations including the International Monetary Fund, the United Nations and the Egmont Group of Financial Intelligence Units took part in the virtual meeting of the FATF.

Earlier this month, the Asia Pacific Group on Money Laundering had retained Pakistan on “enhanced follow-up” status for outstanding requirements. The Asia Pacific Group (APG) is a regional affiliate of the FATF.

FATF President Marcus Pleyer said, “In order to get off the grey list, Pakistan will not only have to comply with the one deficient item on FATF action plan but also the additional six from the Asia-Pacific sub group viz- (a) Enhancing international cooperation by amending the money-laundering law, (b) Demonstrating that assistance is being sought from foreign countries in implementing UNSCR 1373 designations (c) Demonstrating that supervisors are conducting both on-site and off-site supervision commensurate with specific risks associated with DNFBPs (Designated Non-Financial Business and Professions), including applying appropriate sanctions where necessary (d) Demonstrating that proportionate and dissuasive sanctions are applied consistently to all legal persons and legal arrangements for non-compliance with beneficial ownership requirements (e) Demonstrating an increase in money-laundering investigations and prosecutions and that proceeds of crime continue to be restrained and confiscated in line with Pakistan’s risk profile, including working with foreign counterparts to trace, freeze and confiscate assets and (f) Demonstrating that DNFBPs are being monitored for compliance with proliferation financing requirements and that sanctions are being imposed for non-compliance.

Lack of prosecution and action against UN-designated terrorists are the primary reasons why Pakistan remains on the FATF grey list.

“Pakistan’s continued political commitment has led to significant progress across a comprehensive action plan.

The FATF recognizes Pakistan’s progress and efforts to address these action plan items,” the FATF said.

It added that it notes that since February 2021, Pakistan has “made progress” to complete two of the three remaining action items on demonstrating that effective, proportionate and dissuasive sanctions are imposed for terror-funding convictions and that Pakistan’s targeted financial sanctions regime was being used effectively to target terrorist assets.

The global terror-funding watchdog said it “encourages Pakistan” to continue to make progress to address as soon as possible the one remaining CFT-related item by demonstrating that terror-funding investigations and prosecutions target UN-designated terrorist groups.

FATF’s role in combating terror financing became prominent after the 9/11 terror attacks in the US. In 2001 its mandate expanded to include terrorism financing.

Financing of terrorism involves providing money or financial support to terrorists. As of 2019, FATF has blacklisted North Korea and Iran over terror financing.

Twelve countries are in the grey list, namely: Bahamas, Botswana, Cambodia, Ethiopia, Ghana, Pakistan, Panama, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen.

Pakistan has been in the FATF grey list since June 2018 and was asked to implement the FATF Action Plan fully by September 2019.

It was in the same category from 2012 to 2015 too. Pakistan’s inclusion in the grey list can be attributed to the fact that the country’s anti-terror laws were still not in line with FATF standards and also with the latest UN resolution 2462 that pitches for criminalizing terrorist financing.

Pakistan has acted promptly and in the past detained individuals for ‘apprehension’ of breach of peace.

The FATF seeks freezing of funds, denial of weapons access, travel ban and charging them under Anti-Terrorism Act, 1997.

The countries in the grey list face economic sanctions from IMF, World Bank, ADB and problems in getting loans from IMF, World Bank, ADB and other countries, reduction in international trade and finally International boycott.

What is in fact happening is that FATF is turning blind eye to many other countries, notably our neighbour, India whose track record as far as money laundering is concerned, leaves much to be desired.

Its human rights record is soaked in the blood of innocent women, children and elderly people of Kashmir.

Yet FATF looks to the other side when Pakistan points out these glaring violations of FATF guidelines.

— The writer is former DG (Emigration) and consultant ILO, IOM.

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