This subject is significantly important for Pakistan strategic perspective. A 220 million people's country who currently face many challenges including terrorism, economic issues, internal instability, security threat and many more-but the intensity of this issue is more crucial for Pakistan's interest. Pakistan has been on the FATF's grey list since June 2018, but, what is grey list? what dose it mean for Pakistan? why India is taking so much interest? these questions will be answered in this blog, but before going to discuss it just understand the structure of FATF.
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What is FATF?
The Financial Action Task Force (FATF), is an inter governmental organization founded in 1989, its headquarter located in Paris, France. This organization initiative by the Group of Seven (G7), which consisting of seven major developed countries: Canada, France, Italy, Japan, Germany, United Kingdom and the United States. The main objective of FATF is to combat the money laundering, but after the 9/11 incident its work expanded to include terrorism financing.
The purpose of making FATF is to set the standards and promote effective legal measures, moreover, this board strongly checked money laundering, terrorism financing and other threats related to the integrity of the International Financial System. As "the policy-making body", the FATF that works the necessary step and making legislation or reform in order to prevent illegal activities. It also monitors implementation progress which is recommended through "mutual evaluation" of member countries.
The concept of black list or grey list has been issued by the FATF since 2000, black list which is referred as "the call for immediate action", while, grey list referred as "the other monitored jurisdiction". These two terms actually do not exist in official FATF terminology. A blacklisted country face many global sanction including trade, foreign investment, lend money and more, the country becomes isolated globally. The countries on the grey list are subject to increased monitoring by FATF, listed countries may face economic sanctions from institutions like the IMF and the World Bank. But, a question arise under what system a country get listed?
Understand the Procedure:
As I mentioned earlier, this is the organization that works against terrorism financing and money laundering, the FATF’S International
Cooperation Review Group (APG), which operates under FATF, its area is to
monitor the FATF’s recommended states which is highly risk in illegal financial
activities. Basically, FATF’s job is that to highlight those countries which
are suspected to involved unlawful activities, main monitoring body is Asia
Pacific Group which decides whether to retained or eradicate the state from the list?
In each year, 39 group of member countries gather to prosecute the development and set the new standard which meet the requirements of modern financial system. Meanwhile, this group encourage countries to collaboratively take essential steps that avoids banned culture. If the country fails to progress according to the requirements of this body may face restriction in global level. Moreover, a developing country which are in debt faces many problems, because the world’s largest institution like IMF and World Bank demand high interest rates which directly influence the economy of the country. Moreover, investors feel shaky to invest money.
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| 39 Group Member Countries |
Influenced Countries:
Only two countries are blacklisted by FATF, one is Iran and the other one is North Korea, while 18 countries exist in grey list including Albania, the Bahamas, Barbados, Botswana, Cambodia, Ghana, Iceland, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Pakistan, Panama, Syria, Uganda, Yemen and Zimbabwe. Remember, last held meeting of FATF group members decided to remove Mongolia and Iceland from the grey list because of their progress.
FATF-Pakistan:
Pakistan had first figured in a FATF statement after the plenary of February 2008. At that time, FATF recognized Pakistan’s recent progress in anti-money laundering legislation, but, advice financial institution to be aware of the remaining deficiencies. But, in 2013 Pakistan was put on the gray list, however, in 2016 Pakistan was eliminated from the list due to satisfactory performance. Once again in 2018, Pakistan was put in this list and still facing.
In last plenary meeting of FATF, President of Watchdog body Dr Marcus Pleyer acknowleged Pakistan's progress but few points is still to be highlighted. In this regard Islamabad would remain in greylist till February 2021. The action plan submitted by Pakistan has 27 points, including full implementation of that targeted financial sanctions against all UN-designated terrorist. Pakistan now largely addressed 21 out of 27 action items. Just for reminding, Pakistan had complied with only 5 demands in the beginning, but now Pakistan has complied 21 demands, which is a big achievement. With that Pakistan has no chance of being blacklisted. The remaining 6 points would be the toughest challenge for Islamabad.
Basically, the remaining points largely consist of two parts-one is enforcement capability or the next one is related to global issues. First, the law is made, but to implement it you need a strong enforcement structure. You have to enhance the capability of judiciary, prosecution, financial crime investigation and all the related institutions. Furthermore, in limited resources it would be a challenging task for Pakistan. Some expert pridict that Pakistan need much time to improve their implication power. The last part would be the most important and complicated one, it would required to demonstrate effective implementation of targeted financial sanctions against all designated terrorist under 1267 and 1373 resolution of the UN Security Council and those acting for or their behalf, moreover, Pakistan need to address those institution which are banned in UN.
Federal Minister Hammad Azhar admit that Pakistan given "most challenging FATF plan" and "comprehensive ever given to any country." Although, Marcus Pleyer admit progress but, "Pakistan needs to complex outstanding items" and report back after which FATF would send a technical team for on ground verification.
India's Role:
India is consider to be the biggest enemy of Pakistan since independence, as a rival state, do you think that it will leave this opportunity? undoubtedly no. Unfortunately, India is a member of Action Task Force, so, as a member of this body New Delhi with his allies lobby continuously trying effort to push Pakistan in blacklist. Their media as usual playing an immature role and politicise the issue. In parallel China and Turkey also the part of Watchdog body and they are playing a supportive role in favor of Pakistan. Remember, if a country want to avoid blacklist it needs 12 vote out of 39.
Summary:
Although the situation is under control, but be prepared for the next one. Our Government Spokesperson should play a mature role and give sensible statement regarding FATF development rather than take it for political point scoring. As far as our enemies is concerned, they will use every tactic to weaken us internally or externally and you can relate this issue with that. As a responsible citizen, our responsibility is to build a soft image of Pakistan within our parameters and promote positivity of motherland. In last, Do you think that Pakistan would remove from grey list in next year FATF delegation?
For any queries mail me: smmuhibuddin@gmail.com
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