FATF’s failures on money laundering | By Rizwan Ghani


FATF’s failures on money laundering

IN Feb, FATF decided to keep Pakistan on the grey list. Regarding the Money-Laundering (ML) part of the decision, the platform is failing Pakistan.

FATF has failed to stop money laundering in West ( EU one of the main destinations), off shore tax havens, and strict implementations of national, regional and international anti-money laundering measures. Now FATF will have to show credible results.

FATF is scapegoating Pakistan instead of catching big fish. Despite regulations, 99 percent of criminal proceeds still escape control in the EU.

The current EU framework is ineffective against ML. In 2020, $4.5T ML was done worldwide (Politico, May 19, 2020).

Buzzfeed said that big US banks processed $2T dirty money through US financial systems enriching themselves and their shareholders while facilitating the work of terrorists, kleptocrats and drug kingpins (CBS News Sept. 21, 2020).

The European Central Bank and by extension the EU have failed to stop ML. Lagarde is convicted head of ECB who merits removal after Sarkozy was sentenced to prison for campaign finances linking it to the ECB head.

Otherwise, the organization will fail to end ML. Without ECB having direct powers to block ML and withdraw bank license, it is useless.

Until then FATF is failing to have clean leadership, upholding international Anti-Money Laundering (AML) in Europe and undermining global efforts including Pakistan’s to fight ML. The governance structure of European Banking Authority is also inadequate.

The EBA’s board of supervisors comprises banking authorities of its 27 EU member states. How can they monitor themselves on AML.

EBA cannot monitor ML in member states then how does FATF expect to stop ML through 27 countries.

France failed to get EU body with AML supervisory powers in Europe but it is raising objections against Pakistan. Without having the EU body, FATF is playing politics with Pakistan.

Only 5 out of 27 EU states implemented free-to-access public register of the real owners of the companies in 2020.

After Panama Scandal, it was a key transparency measure to fight money laundering as required by the 2018 EU directive to end corruption, financial crime and terrorist financing.

France did not fulfill the EU directive and Pleyer failed to block the EU. Both Macron and FATF therefore have no moral and legal right to raise objections against Pakistan.

FATF cannot link Pakistan’s progress to AML. All EU members rejected France’s proposal in the European Commission for a new EU body to allow independent and proactive investigation and sanction on individual Bank that fails to comply with AML obligation but they still got their share from the EU$2.2T corona pandemic stimulus package and France did not object to it.

There is no justification for FATF to stop Pakistan’s access to international financial aid and monetary assistance.

Pakistan should demand implementation of public register in the Europe to win fight against money laundering.

FATF, the EU and the UK are lying on dirty money. If foreign property register was public in the UK, there would have been no 1 Hyde Park case controversy in Pakistan.

Labour Shadow Chancellor Dodds has repeatedly demanded the UK government to introduce the register to prevent criminals using homes as “dodgy bank accounts”.

FATF is not taking action against UK to break ML chain. Despite Cameron’s 2015 Singapore pledge that there would be no place for dirty money in Britain, the number of money laundering complaints doubled in the UK from 14K to 34K between 2015 and 2019.

Johnson government has reneged on its promise to continue legislation to combat money laundering and achieve greater transparency in the UK property market in complete violation of Queen’s Dec 2019 Government agenda legislative speech.

FATF is weakening democracy in debt-ridden Pakistan. It is already in a precarious financial situation while London’s money laundering fuels corruption across the planet (10 Sept 2020, the Guardian).

It is political use of FATF by international establishment to force Pakistan to stay in Western camp in multi-polar world or face destruction of its economy by linking FATF rating with access to international financial aid while western countries are using mega loan packages to revive their economies. FATF and all those countries opposing Pakistan have to be defeated by challenging them.

They are misusing international platforms to weaken country’s economy and democracy. Biden called attacks on the Capitol Hill terrorism.

Trump collected $207.5M after losing election, which are being used to weaken democracy in the US. Before Pleyer comes to Pakistan, FATF should take action against US based on same yardstick that it is using against Pakistan. Pakistan expects a supporting not a dictating FATF.

Elimination of ML and corruption are important for strong democracy, but it should be gradual and comprehensive.

The EU should play its part so that know your customer, audit report, and other banking AML checks are effective to block receiving public stolen funds in West.

It will automatically end ML in Pakistan.
—The writer is senior political analyst based in Islamabad.

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