FATF’s Do More Approach

In Backgrounder, Economic Security, National Security
July 8, 2021
Mahnoor Islam
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Pakistan has been on the ‘increased monitoring’ list also known as the ‘grey list’ of the global money laundering and terrorist financing watchdog Financial Action Task Force since June 2018. Pakistan had hoped to get out of the grey list in June 2021 however the decision was not in Pakistan’s favour. Despite significant progress, Pakistan

Pakistan has been on the ‘increased monitoring’ list also known as the ‘grey list’ of the global money laundering and terrorist financing watchdog Financial Action Task Force since June 2018. Pakistan had hoped to get out of the grey list in June 2021 however the decision was not in Pakistan’s favour. Despite significant progress, Pakistan has been retained in the grey list, a decision Pakistan wasn’t expecting and a decision which gives rise to many questions. So far, Pakistan has achieved 26 out of 27 targets. Interestingly, Pakistan has the same compliance rate as the United States and more compliant than India and China but none of the countries besides Pakistan are in the grey list. Other countries have also gotten clearance after fulfilling 80% compliance but Pakistan has been pressurized for a 100% compliance. Pakistan has also been handed a new six point action plan to remove deficiencies in the Mutual Evaluation Report. This do more approach hints at politicization and biases towards Pakistan.

The Parliament of Pakistan has passed many important legislations in order to implement the FATF action plan such as The Foreign Exchange Regulations (Amendment) Act, 2020, The Anti-Money Laundering (Amendment) Act, 2020, The NACTA (Amendment) Act, 2020, The Anti-Terrorism (Amendment) Act, 2020 and The Anti-Money Laundering (Second Amendment) Act, 2020 thus it seems to be unreasonable to ask Pakistan to implement more points. The new action plan is also going to be time consuming for Pakistan. FATF President, Mr. Marcus Pleyer’s said that Pakistan must complete all list of items on the action plan along with the new six point plan that has been handed out. He also mentioned that both onsite appraisals must be approved and completed. This seems to be extreme for Pakistan and shows biases towards it especially after Pakistan has made excellent progress as noted by Mr. Player himself. Furthermore, why does FATF turn a blind eye towards India’s terror financing in Pakistan as evidenced by Indian spy Kulbhushan Jadhav along with its human rights violations in Indian Illegally Occupied Jammu and Kashmir (IIOJK).

FATF has failed to recognize that the main facilitators of money laundering are banks who operate in the West such as JP Morgan, HSBC and UAE Central Bank as shown by the FinCEN leaks. According to FinCEN leaks, London is the hub of money laundering activities. A report by Transparency, UK estimated that 86 UK based banks and financial institutions are involved in money laundering. So why is FATF an ‘international rule-based system’ not recognizing or taking action against the UK? This proves that FATF is a political organization controlled by powerful countries to further their narrative and strategic motives. The FATF judgement comes at a time when the US is departing Afghanistan. Prime Minister Imran Khan’s recent stance on not allowing the US to use its territory for military installations is an answer the US is not used to hearing. It was highly likely that the US would pressurize Pakistan to give into its wishes and FATF is an excellent political instrument that can be used to pressurize Pakistan into complying with the US’ wishes. Unfortunately, as a result of India’s lobbying and constant portrayal of Pakistan as a terror financing country, Pakistan’s role in Afghan peace process seems to go unappreciated. Pakistan
played a major role in bringing the Taliban to the negotiating table which shows Pakistan’s commitment towards peace and stability not only in Pakistan but in the entire region but unfortunately, Pakistan has once again been overshadowed by India’s influence.
Pakistan must be appreciated for the work it has done in order to comply with FATF. Choosing to keep Pakistan in the grey list shows that while Pakistan was good, but not good enough. The lack of response shows that FATF has become politicized and is being influenced. If it’s India’s lobbying or the American pressure, FATF needs to move on and recognize Pakistan’s progression. Pakistan must not give into the pressure but it also needs to take serious steps to counter the lobbying against it. Pakistan needs to convince the world and thus should engage in constructive
narrative building which shows Pakistan’s efforts regarding terrorism and money laundering. Pakistan should start working towards diplomatic support. The Shanghai Cooperation Organization (SCO) members such as China and Turkey can help in countering FATF prejudice towards Pakistan.
It has been estimated that Pakistan has already suffered a loss of $38 billion over the years because of its greylisting thus Pakistan’s main objective should be to get white-listed before the amount increases further. Not being black-listed is an achievement. Pakistan seems to be on the right path but it must continue on the same trajectory in order to get out of the grey list.