Pakistan on FATF’s Grey-List: India’s Role

#1 · 8th July 2021, 11:57 pm

Quote from Bukhtawer Parvaz on 8th July 2021, 11:57 pm
In the past, terrorism and money laundering have become threats to global peace and security. Therefore, to counter this threat the Financial Action Task Force (FATF) was developed to combat the crimes that set the standards and promote the implementation of legal and regulatory measures for combating money laundering, terror financing. FATF ensures that countries follow the rules, if not then they are added to the grey or blacklist. As there are two kinds of lists in FATF: Greylist and Blacklist. Grey list referred to as “Jurisdictions under increased monitoring” such as the countries on the FATF grey list have a much higher risk to fall on the blacklist but these countries are committed to working with FATF to develop a complete action plan that will address their AML/ CFT deficiencies. The grey list serves as a warning to countries that may be added to the blacklist. Furthermore, the FATF increases its monitoring of the countries that are placed on this list. As the countries complete their action plans, they are removed from the grey list. The FATF blacklist is known as “High-risk Jurisdictions subject to a Call for Action” that identifies the countries with serious strategic deficiencies to prevent terror financing and money laundering. The blacklist countries are also known as non-cooperative countries or territories. The FATF updates the Greylist and blacklist regularly, adding or removing countries from the list.
Interestingly, it has been few years since Pakistan’s rise to fulfill the commitments of FATF by improving its security. Though being on the grey list is the biggest challenge for Pakistan as the organization sets some standards to control money laundering and terror financing that is challenging for the country to implement or follow all the rules.
In 2008, Pakistan was first added to the FATF’s grey list and after one year the country was removed from the grey list after the country adopted the anti-money laundering legislation. Moreover, in 2010 Pakistan committed to working with FATF and Asia Pacific Group to sort out the issues but afterward, it showed no progress. Pakistan was placed again on the FATF Greylist in 2012 and remained till 2015 for which it was globally acclaimed. During this time, Pakistan faced international pressure being on the Greylist but again in 2018 for the second time Pakistan was put on FATF’s Greylist. The FATF has issued a 27-point action plan for its implementation, after which it will be removed from the grey list. This plan is given by FATF with a warning if the country fails to implement then it would lead the country to blacklist and so far Pakistan has completed 26 points out of 27. Even then, the country is still on the Greylist, thus this decision points towards the partiality of the committee. The government of Pakistan tried its best to save the country from being blacklisted and remove itself from the grey list but unfortunately the decision was beyond expectations.
Until now, the country encountered many challenges but apart from this the major hurdles and challenges for Pakistan are not other than India which is using all its power to blacklist Pakistan. As Pakistan and India have a long history of rivalry, India has always tried to create propaganda against Pakistan through the use of spreading fake news. Moreover, India is lobbying with the international community to push Pakistan into the FATF blacklist. The Prime Minister even highlighted in an interview that India wants to see Pakistan bankrupt and push us into FATF’s blacklist. Even the Indian media run a campaign against Pakistan in an attempt to influence the FATF deliberations before the FATF plenary meeting held in October 2020. Similarly, behind the recent bomb blast in Lahore, India was involved. Even Islamabad has repeatedly urged the International Financial watchdogs to take notice of India's innumerable malicious campaigns against Pakistan and its efforts to politicize the FATF’s further proceedings. India has repeatedly carried out terrorist attacks in Pakistan, but no actions have yet been taken by the FATF.
Traditionally, as the FATF meeting approaches, India will try to provoke Pakistan, which will affect Pakistan’s status on FATF. Terrorist attacks have been taking place in the country a few days before the FATF plenary meeting and such incidents shortly before the FATF plenary meeting show how India is interested to see Pakistan on the FATF blacklist and for that India can do anything. Therefore, India might take more encroachments in the country before the next FATF plenary meeting because India would never want Pakistan to be removed from the FATF grey list. Thus, when the FATF meeting is about to take place, India may start some kind of riot in Pakistan such as any terrorist activity, Balochistan conflict, and Shia-Sunni conflict. In the current situation, the United States is moving out of Afghanistan and in a recent interview with the Prime minister of Pakistan, the US asked for bases. But Pakistan has clearly banned the United States from providing bases; this is also a setback for Pakistan to still stay on the grey list. Subsequently, the RAW has carried out bomb blasts in Pakistan.
Pakistan should emphasize the Indian lobbies and RAW's involvement in the FATF plenary meeting and also participate pro-actively through its diplomatic channels, as India is a significant impediment to Pakistan. Additionally, accountability and institutional improvements are needed, and severe sanctions against prohibited entities are necessary to obstruct money laundering and terrorist funding routes. Pakistan hopes to be removed from the FATF grey list by the end of 2021 as it has made significant progress in implementing the FATF criteria. The government is putting efforts to stabilize the economy of the country for which it needs to remove itself from FATF’s Greylist. It is not new to Pakistan to be in FATF’s grey-list so, there is a need for a proper fund transfer system and its accountability as FATF introduced a recommendation that ensures the consistent AML/CTF anti-money measures are imposed on all forms of money transfer services. To implement this, the policymakers must provide rules and regulations so that the jurisdiction is not considered soft by the ones who transfer money.
Moreover, in the future India might take place some more terrorist activities in the country to divert the world’s attention towards Pakistan to hide their internal issue that is farmer’s protest. As a result, Pakistan needs to be defensive and the government of Pakistan needs to step up its efforts to create a proper legal framework as per FATF requirements and must ensure transparency in it.

In the past, terrorism and money laundering have become threats to global peace and security. Therefore, to counter this threat the Financial Action Task Force (FATF) was developed to combat the crimes that set the standards and promote the implementation of legal and regulatory measures for combating money laundering, terror financing. FATF ensures that countries follow the rules, if not then they are added to the grey or blacklist. As there are two kinds of lists in FATF: Greylist and Blacklist. Grey list referred to as “Jurisdictions under increased monitoring” such as the countries on the FATF grey list have a much higher risk to fall on the blacklist but these countries are committed to working with FATF to develop a complete action plan that will address their AML/ CFT deficiencies. The grey list serves as a warning to countries that may be added to the blacklist. Furthermore, the FATF increases its monitoring of the countries that are placed on this list. As the countries complete their action plans, they are removed from the grey list. The FATF blacklist is known as “High-risk Jurisdictions subject to a Call for Action” that identifies the countries with serious strategic deficiencies to prevent terror financing and money laundering. The blacklist countries are also known as non-cooperative countries or territories. The FATF updates the Greylist and blacklist regularly, adding or removing countries from the list.

Interestingly, it has been few years since Pakistan’s rise to fulfill the commitments of FATF by improving its security. Though being on the grey list is the biggest challenge for Pakistan as the organization sets some standards to control money laundering and terror financing that is challenging for the country to implement or follow all the rules.

In 2008, Pakistan was first added to the FATF’s grey list and after one year the country was removed from the grey list after the country adopted the anti-money laundering legislation. Moreover, in 2010 Pakistan committed to working with FATF and Asia Pacific Group to sort out the issues but afterward, it showed no progress. Pakistan was placed again on the FATF Greylist in 2012 and remained till 2015 for which it was globally acclaimed. During this time, Pakistan faced international pressure being on the Greylist but again in 2018 for the second time Pakistan was put on FATF’s Greylist. The FATF has issued a 27-point action plan for its implementation, after which it will be removed from the grey list. This plan is given by FATF with a warning if the country fails to implement then it would lead the country to blacklist and so far Pakistan has completed 26 points out of 27. Even then, the country is still on the Greylist, thus this decision points towards the partiality of the committee. The government of Pakistan tried its best to save the country from being blacklisted and remove itself from the grey list but unfortunately the decision was beyond expectations.

Until now, the country encountered many challenges but apart from this the major hurdles and challenges for Pakistan are not other than India which is using all its power to blacklist Pakistan. As Pakistan and India have a long history of rivalry, India has always tried to create propaganda against Pakistan through the use of spreading fake news. Moreover, India is lobbying with the international community to push Pakistan into the FATF blacklist. The Prime Minister even highlighted in an interview that India wants to see Pakistan bankrupt and push us into FATF’s blacklist. Even the Indian media run a campaign against Pakistan in an attempt to influence the FATF deliberations before the FATF plenary meeting held in October 2020. Similarly, behind the recent bomb blast in Lahore, India was involved. Even Islamabad has repeatedly urged the International Financial watchdogs to take notice of India's innumerable malicious campaigns against Pakistan and its efforts to politicize the FATF’s further proceedings. India has repeatedly carried out terrorist attacks in Pakistan, but no actions have yet been taken by the FATF.

Traditionally, as the FATF meeting approaches, India will try to provoke Pakistan, which will affect Pakistan’s status on FATF. Terrorist attacks have been taking place in the country a few days before the FATF plenary meeting and such incidents shortly before the FATF plenary meeting show how India is interested to see Pakistan on the FATF blacklist and for that India can do anything. Therefore, India might take more encroachments in the country before the next FATF plenary meeting because India would never want Pakistan to be removed from the FATF grey list. Thus, when the FATF meeting is about to take place, India may start some kind of riot in Pakistan such as any terrorist activity, Balochistan conflict, and Shia-Sunni conflict. In the current situation, the United States is moving out of Afghanistan and in a recent interview with the Prime minister of Pakistan, the US asked for bases. But Pakistan has clearly banned the United States from providing bases; this is also a setback for Pakistan to still stay on the grey list. Subsequently, the RAW has carried out bomb blasts in Pakistan.

Pakistan should emphasize the Indian lobbies and RAW's involvement in the FATF plenary meeting and also participate pro-actively through its diplomatic channels, as India is a significant impediment to Pakistan. Additionally, accountability and institutional improvements are needed, and severe sanctions against prohibited entities are necessary to obstruct money laundering and terrorist funding routes. Pakistan hopes to be removed from the FATF grey list by the end of 2021 as it has made significant progress in implementing the FATF criteria. The government is putting efforts to stabilize the economy of the country for which it needs to remove itself from FATF’s Greylist. It is not new to Pakistan to be in FATF’s grey-list so, there is a need for a proper fund transfer system and its accountability as FATF introduced a recommendation that ensures the consistent AML/CTF anti-money measures are imposed on all forms of money transfer services. To implement this, the policymakers must provide rules and regulations so that the jurisdiction is not considered soft by the ones who transfer money.

Moreover, in the future India might take place some more terrorist activities in the country to divert the world’s attention towards Pakistan to hide their internal issue that is farmer’s protest. As a result, Pakistan needs to be defensive and the government of Pakistan needs to step up its efforts to create a proper legal framework as per FATF requirements and must ensure transparency in it.