FATF: Pakistan Placed on Grey List

By Saleem Qamar Butt

Brigadier (retd) Saleem Qamar Butt

In response to mounting concern over money laundering, the Financial Action Task Force on Money Laundering (FATF) was established by the G-7 Summit that was held in Paris in 1989.  Recognizing the threat posed to the banking system and to financial institutions, the G-7 Heads of State or Government and President of the European Commission convened the Task Force from the G-7 member States, the European Commission and eight other countries. In February 2012, the FATF completed a thorough review of its standards and published the revised FATF Recommendations. This revision is intended to strengthen global safeguards and further protect the integrity of the financial system by providing governments with stronger tools to take action against financial crime. They have been expanded to deal with new threats such as the financing of proliferation of weapons of mass destruction, and to be clearer on transparency and tougher on corruption.  The 9 Special Recommendations on terrorist financing have been fully integrated with the measures against money laundering. This has resulted in a stronger and clearer set of standards. During 1991 and 1992, the FATF expanded its membership from the original 16 to 28 members. In 2000 the FATF expanded to 31 members, and has since expanded to its current 37 members, with Indonesia, Israel and Saudi Arabia as observer countries, nine FATF Associate Members and more than two dozen Observer International Organizations. To achieve global implementation of the FATF Recommendations, the FATF relies on a strong global network of FATF-Style Regional Bodies (FSRBs), in addition to its own 37 members.  The nine FSRBs have an essential role in promoting the effective implementation of the FATF Recommendations by their membership and in providing expertise and input in FATF policy-making.  Over 190 jurisdictions around the world have committed to the FATF Recommendations through the global network of FSRBs and FATF memberships.

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Pakistan was formally added to the grey list of countries involved in providing monetary assistance to terrorism and related causes after a recent meeting of the FATF in Paris. The Financial Action Task Force (FATF) has said Pakistan has made “a high-level political commitment” to work with the global watchdog and Asia/Pacific Group on Money Laundering (APG) to strengthen its anti-money laundering (AML) and combating the financing of terrorism (CFT) regime. Pakistan was previously placed on Grey List and then removed in 2015 without such unprecedented media hype as witnessed now. Presently there are two countries on FATF Black list i.e. Iran and North Korea.

On the face of it, effective implementation of both AML and CFT are bound to serve Pakistan very well as it would be the case for any other country. As a matter of fact, any stable and honourable country should be on its own doing as a routine matter what FATF is recommending for enforcement. However, the leverage to define terrorism, tag terrorists, extremist organizations and money launderers stays under the monopoly of the member countries of FATF, that selectively apply it on countries not ready to comply with their strategic demands, dictation and desires; hence, despite its noble face, FATF provides an effective mechanism and tools to economically coerce any country that is out of favour. India is gleeful on this episode and so is the case with US and allies who are expecting Pakistan to deliver magical results as per their desires both on Kashmir and Afghan fronts respectively. So any country like Pakistan in a ctach-22 situation, subjected to dozens of foreign sponsored proxies including by members and observers of FATF will remain prone to be further exploited and pushed to the corner as and when deemed appropriate by the big and brutal. It needs no genius to fathom the economic woes that Pakistan will have to face especially when much touted and most projected trusted friends like Saudi Arabia and China dump her on FATF forum. The trimmings of FATF listing coincides with most difficult period when Pakistan foreign loan is about to touch danger mark of US $100 billion, election season in Pakistan, its political elite under trial for money laundering and massive corruption and people suffering from unprecedented inflation, energy and water crises……. we may revisit ‘Confessions of an Economic Hit Man’ by John Perkins. Once again Pakistan’s inertia on addressing its fault lines, poor governance, weak writ of law, frail economy due to corruption beyond measures and poor foreign policy are all laid bare by FATF Grey Listing nevertheless. Not an easy sail for forthcoming Government in Pakistan!

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*        Brigadier (retd) Saleem Qamar Butt, SI (M) is a student of International Relations, Defence and Warfare Studies with expertise in Executive Management, Military & Intelligence Diplomacy, Strategic Analyses and Forecast. (sqbutt61@gmail.com)

 

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