FATF credibility is at stake: How many more shades of grey for Pakistan?
Star Rating Loader Please wait...
Issue Courtesy: South Asia Monitor | Date : 24 Oct , 2019

Instead of downgrading Pakistan to the ‘blacklist’ from its ‘grey list,’ the Financial Action Task Force (FATF) gave Islamabad four more months to comply with its conditions.  The FATF meeting in Paris last week was chaired by Pakistan’s ‘all-weather’ friend China. Besides China, Malaysia and Turkey also voted in favour of Pakistan, although it failed to comply with FATF stipulations on money laundering and financing of diverse terror outfits. FATF president Xiangmin Liu said in a press conference on October 18 that “Pakistan needs to do more, and it needs to do it faster”. 

China had to support Islamabad as Pakistan’s economy is on the verge of collapse, despite Saudi Arabia, United Arab Emirates and China extending financial assistance. The International Monetary Fund (IMF) has sanctioned a loan of $6 billion to Pakistan, with stringent stipulations, but the loan will be in jeopardy if Pakistan is downgraded to the ‘blacklist’. China has invested huge sums on the China Pakistan Economic Corridor (CPEC), an essential part of the Belt and Road Initiative (BRI), which is a dream project of Chinese President Xi Jinping. The BRI envisages China’s involvement in development of infrastructure projects in 152 countries across the world. If FATF downgrades Pakistan to the ‘blacklist,’ its economy might collapse, leaving the fate of the CPEC uncertain. China is also using Pakistan against India, which it considers as a potential rival. 

The Asia Pacific Group (APG), a regional affiliate of the FATF, submitted its report before the Paris meeting. The APG report was extremely critical of Pakistan and recommended its downgrade to the ‘blacklist’. The APG’s Mutual Evaluation Report stated that Pakistan has failed to “fully implement UNSCR 1267 obligations against the listed individuals and entities.” It clearly stated that Pakistan had complied with only five of 27 conditions and could not demonstrate that terrorist fundraising had been curbed and people involved in money laundering had been prosecuted. Several terrorist outfits, including Haqqani Network, Lashkar-e-Toiba (LeT), Jamaat-ud-Dawa (JuD), Falah-i-Insaniat Foundation (FiF) and even Islamic State are operating from Pakistan. The 229- page report also claimed that LeT/JuD and FiF are openly operating in Pakistan, holding public rallies and raising funds. 

Although Pakistan arrested four leaders of the LeT and its leader Hafiz Saeed was put under house arrest before the FATF meeting, these cosmetic actions were only intended to show that some action had been taken. 

Representatives of 205 countries and the IMF, World Bank and United Nations attended the FATF meeting in Paris. Pakistan was first placed on the FATF ‘grey list’ in June 2018 and given 15 months to execute a 27-point action plan, which Islamabad failed to implement. 

The Pakistani media and Minister for Economic Affairs Hammad Azhar, who led the Pakistani delegation to FATF, lauded Pakistani efforts and said Pakistan had complied with 20 of the 27 points, hence the FATF was satisfied with the progress. Actually, Pakistan was saved because the FATF charter of 36 countries states that support of at least three countries is needed to prevent any country from being downgraded to the blacklist. 

India, as the worst victim of Pakistan sponsored terrorism, supplied documentary evidence to the FATF of Islamabad’s involvement in spreading terrorism in this country. Indian officials successfully managed to convince most FATF members, but China, Turkey and Malaysia remain unconvinced. Since it has proved difficult to convince China and Turkey, India must review its trade relations with Malaysia. India is the largest importer of palmolein in the world and imported palmolein worth $ 900 million from Malaysia in the first six months of 2019. In the last financial year, India imported goods worth $ 10.81 billion from Malaysia, $4 billion more than the value of India’s exports. Malaysia has also given shelter to Zakir Naik, who is spreading hatred in the subcontinent. India should try to shift its imports to Indonesia, thus sending a blunt message to Malaysia for acting against Indian interests. 

Pakistan’s media has projected it as the country’s victory and a defeat for India that the FATF did not downgrade it to the blacklist. However, the fact remains that Pakistan must act against terrorists, otherwise, it risks falling in the blacklist in February 2020. The credibility of the FATF is also at stake. Despite repeated warnings from the FATF, Pakistan has still not taken any worthwhile actions to curb money laundering and assistance to diverse terrorist outfits. Pakistan was saved this time because of assistance from three countries. That may not happen every time. In international relations, there are no permanent friends or permanent foes. Relations change as per the necessity of the country. These countries have supported Pakistan because of their ulterior motives. 

The FATF has given Pakistan a four months’ respite after putting it on the dark-grey list. The question now is how many shades of grey are there and till when can the FATF save Pakistan from the downgrade, as its own credibility is at stake? 


Rate this Article
Star Rating Loader Please wait...
The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Jai Kumar Verma

is a Pakistan watcher and has written extensively on the nefarious designs of the ISI, smuggling of fake Indian currency notes, etc. He is a strategic analyst and delivers lectures in training academies of paramilitary and intelligence organisations.

More by the same author

Post your Comment

2000characters left

2 thoughts on “FATF credibility is at stake: How many more shades of grey for Pakistan?

  1. FATF is governed by the West .
    Pakistan , since 1955 has been a adjunct of West in S Asia, namely US.

    US sponsored terror camps at Balakot, amongst many others created an adverse situation in Afghanistan , pre 1979 , forcing Soviet Union to intervene .

    US and West sponsored Jehad against Soviet occupations , waged from Pakistan ultimately led to break up of Soviet Union .

    US has exported terror from Pakistan to Central Asian nations, Kosovo , Chechenya, Xingqiang and Kashmir (pre 2002) , Iran and many more places.

    Pakistan has served in furtherance of US strategic goals , very ably.

    FATF warnings etc are just a ploy of US and West to appease and make India feel victorious and thereby “Strong “. This will help them to slowly erode India’s sovereign status and make it a bulwark against Chinese expansion and also to capture the world’s largest arms market, that is India.

    The writer could well have mentioned that UN has unfrozen the Bank accounts of Hafeez Sayeed recently and therefore India should be very wary of the US – Pak nexus , which runs very deep and is the main prop of the Deep State in Pakistan.

More Comments Loader Loading Comments