The Shadow of the FATF


Usman W. Chohan

It is becoming increasingly clear
to the people of Pakistan that the
FATF is a highly politicized institution which has been weaponized to browbeat us into “doing more” indefinitely. The role that India has been playing in the FATF’s mirror-body, the Asia-Pacific Group (AFG), has been thuggish and conspiratorial, and has detracted the institution from its actual anti-money laundering (AML) responsibilities.
After all, if the FATF were serious about chasing and curbing global money laundering practices, its crosshairs would not be on Islamabad, but on the Cayman Islands, Delaware, and the Bahamas; not to mention New York, London, and Frankfurt; the citadels that thrive on the exploitation of capital whose provenance is dirty.
In his most recent speech, PM Imran Khan specifically pointed to the FATF in the chronology of events that have led to the imposition of the Hindu-supremacist police state in Indian-Occupied Kashmir. Why? Because the arbitrary “opinions” of the FATF, as our financial judge, jury, and executioner, have put a noose around our economy, such that even grey-listing costs us more than $10 billion dollars per year. Black-listing would indeed be far worse. The FATF’s sanctions are influential. They weigh upon IMF decisions to issue bailout credit facilities, and set the tone for foreign financial assistance during periods of economic constraints. Yet the FATF’s sanctions also represent a form of collective punishment in that all Pakistani citizens are affected by the actions of a select few.
As such, an undue hardship is meted out on an entire society, much to the sadistic delight of New Delhi’s fascist circles, even though collective punishment is prohibited under international humanitarian law. But while New Delhi yearns for our FATF black-listing, as its trigger-happy media was quick to misreport this week, the US needs Pakistan to ease out its withdrawal from Kabul and so cannot shutter Pakistan’s economy entirely, despite its earlier support for India’s connivance.
For now, Pakistan has walked the tightrope well, managing to secure a bailout while also surviving the APG’s assessment of its Mutual Evaluation Report (MER) this week. The MER for the period February to October showed the efforts underway to check, contain, and eliminate money-laundering in the country; and although progress was not deemed entirely satisfactory, the APG’s decision has not led to FATF black-listing (yet).
The assumption behind the FATF’s requirements, it should be noted, is that a developing country will overhaul its entire economy at such a short interval. The ambit of measures required includes laws on exchange-control mechanisms, banking and non-banking channels, financial and insurance services, corporate and non-corporate sectors, and still more.
It is difficult to imagine even Paris or Canberra, where the FATF and APG are situated respectively, managing such upheavals in their economies. Yet the herculean task of eliminating the black economy overnight is left to us.
The APG now deems that further actions are still needed by Islamabad to strengthen its AML measure. Pakistan has therefore now been placed in the Enhanced Expedited Follow-Up List. The venal Indian media hooted this as a victory prematurely, since the FATF’s spokesperson Alexandra Wijmenga had to clarify that it was the FATF, and not the APG, that wields the power to black-list. Pakistan’s finance ministry also rejected these reports as ‘incorrect and baseless,’ much to the dismay of the cartoonish Indian media.
Follow-up meetings on Pakistan’s progress on AML measures are scheduled over the next few months, including a review in Bangkok on September 5 and another meeting in Paris from October 18 to 23. Yet New Delhi should not be too quick to pop the champagne on its hybrid warfare agenda.
They should recognize that, if the FATF were to black-list Pakistan, then there would be no more sticks to wield against us. This was observed by PM Imran Khan in his most recent speech, when he remarked that India has already played its last card. Once Pakistan is on the black-list, it has nothing more to lose.
It is much better for the India and the US, as part of a broad-based but low-intensity brutalization of Pakistan, to keep us on the grey-list, while we still have something to lose. In that way, Islamabad would still not respond in a manner that mirrors the ruthless and hastily-executed moves of New Delhi’s Hindu-supremacist regime. In the meantime, the true nature of the FATF as a misguided farce is becoming increasingly evident to policymakers and to the public. Pakistan is being pulled in two contradictory directions. On one hand, there is a predilection to appease the FATF’s charade of men in polished suits, deviate as they may from their actual objectives of global anti-money laundering. For that, instead, they would need to crack down on banks in Frankfurt; not abandoned seminaries in Balakot.
On the other hand, there is also a growing political will to call the FATF out for the sham of global finance that it has come to represent. Which tendency, appeasement or opposition, will ultimately prevail is a function both of the intensity of foreign venality, as well as the intensity of our collective will.
—The writer is the Director for Economics and National Affairs at the Centre for Aerospace and Security Studies (CASS). He can be reached at cass. [email protected]