Pakistan’s triumphant entry into FATF’s white-list | By Syed Qamar Afzal Rizvi


Pakistan’s triumphant entry into FATF’s white-list

AFTER a tortuous struggle of four years, Pakistan finally succeeds to secure a place in FATF’s white listing.

The Financial Action Task Force (FATF), a global money laundering and terrorism financing watchdog, on Friday (Oct. 21) removed Pakistan from the list of countries facing FATF’s “increased monitoring”. By shedding the FATF’s grey-list mantle, Pakistan has proved that it is the most responsible state.

Thus, as per the FATF’s ruling, ‘’Pakistan is “no longer subject to FATF’s increased monitoring process; to continue to work with APG (Asia/Pacific Group on Money Laundering) to further improve its AML/CFT (anti-money laundering & counter- the terrorist financing) system’’.

In response to this development, Prime Minister of Pakistan Mohammad Shehbaz Sharif reacted on twitter, ‘Pakistan exiting the FATF grey-list is a vindication of our determined and sustained efforts over the years’’.

Nevertheless, ‘’in order to be removed from FATF monitoring, a jurisdiction must substantially address all the components of its action plan.

Once the FATF has determined that a jurisdiction has done so, it will organize an on-site visit. ..If the on-site visit has a positive outcome, the FATF will decide on removing the jurisdiction from public identification at the next FATF plenary.

The concerned jurisdiction will then continue to work within the FATF or the relevant FSRB, through its normal follow-up process, to improve its AML/CFT regime’’. This is what the case with Pakistan.

FATF’s President T Raja Kumar from Singapore, officially announced on 21 October at a media briefing in Paris that Pakistan was being taken off the grey list in line with a consensus decision by the watchdog’s 39 member countries.

In its appraisal note, the FATF proclaimed that the reforms— carried out by Islamabad— were good for the security and stability of Pakistan and the region.

The President Kumar furthered, ‘’an onsite inspection by a FATF team that visited Pakistan at the end of August had established that the country had “largely addressed” all of the 34 action items.

The first action plan with 27 items focused on terror financing risks, while the second action plan with seven items focused on money laundering’’.

Retrospectively put, after Pakistan’s placement on the grey list in June 2018, a 27-points action plan was designed which span over a time period of fifteen months by the FATF which Pakistan must comply if it wanted to avoid being blacklisted.

The Ministry of Finance stated that it is bound to meet the initial targets by February 2019 and all 27 targets by September 2019. These 27-point action plan comprised a number of guidelines which Pakistan must effectively act upon.

According to the measures proposed by the FATF body. Thus, Pakistan was directed to invest unprecedented number of efforts to identify every sort of terrorist activity and take legal action against them.

It envisaged that Pakistan must ban the various organizations such as Haqqani Network and Jaishe-e-Muhammad (JeM).

Likewise, the money transactions of all such radical groups needed to be effectively tracked and terminated in order to devoid them of the capital resources.

Moreover, the measures also included that Government of Pakistan was required to comply with AML/CFT provisions of the FATF, through sanctions upon institutions defying the respective norm.

A better coordination was to be reflected in the working of the federal and provincial authorities to counter narcotics-smuggling and cash smuggling.

Subsequently, a plenary meeting of the FATF convened from 24 June till 29 June 2020 which pointed out that “it has identified Pakistan as a jurisdiction with strategic AML/CFT deficiencies”.

Meanwhile, the Money Laundering Act (MLA) got passed by the National Assembly of Pakistan with majority on 30th September 2019.

The MLA that was amended with proposed alteration involves various stake holders including State bank of Pakistan (SBP), Federal Investigation Agency (FIA), Securities and Exchange Commission of Pakistan (SECP) and Federal Board of Revenue (FBR).

Following are some of the measures taken by or assigned to these institutions by the government.

The current development is the fruition of the seamless efforts extended by Pakistan’s military and its civil administrations.

On the legal front, the civil administration took some bold initiative’s regarding the legislation on FATF while on the front of terror financing the military establishment took some drastic step.

Noteworthy, Pakistan state institutions— the Parliament, Judiciary, the State Bank of Pakistan, the FBR, and the National Accountability Bureau (NAB)—unanimously played a cohesive role in implanting the 34 point agenda.

Most importantly, Pakistani anti-terrorism court convicted some of the leading leaders of the militant groups.

True, Pakistan’s economy is dependent on international investors. The entry into the white-list will positively boost its economic indicators that include— imports, exports, remittances, and access to international loans.

All the while, Pakistan will have an improved access to finances in the form of foreign direct investments and financial assistance from international donors, which would help maintain the country shore up its teetering economy.

And of course, the economy will start booming now as the new status will help attract new investment opportunities, easing the financial burden on the government.

The economic indicators suggest that Pakistan’s borrowing capacity will experience an upgrade as the move will revitalize its ties with global policy institutions like the UN, IMF, and the World Bank.

It will also help expand international trade as Pakistan is no longer a high risk country. In a nutshell, Pakistan is now in a stronger position to come to grips with the issues like depreciating currency value, widening trade deficit, and runaway inflation.

Moreover, widely hailed as a diplomatic victory, the potential delisting has an array of positive implications for the economy, as it would improve investments, facilitate international lending and give an impetus to Pakistan’s exports and imports, say experts.

Meanwhile, the US State Department said that the US encouraged Pakistan to continue its anti-money laundering and counter-terrorism efforts.

The US State Department said that Pakistan has met FATF goals by addressing its “strategic shortcomings”. Due to these efforts, Pakistan was left out of the grey-list of FATF. Nonetheless, it is time to reorient our economic and monetary policy based on short-term and long-term strategies.

—The writer, an independent ‘IR’ researcher-cum-international law analyst based in Pakistan, is member of European Consortium for Political Research Standing Group on IR, Critical Peace & Conflict Studies, also a member of Washington Foreign Law Society and European Society of International Law. He deals with the strategic and nuclear issues.


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