Will FATF degrade the rankings of Pakistan from grey-list to black-list for supporting terrorism and money laundering. Pakistan has just one more month to explain to the Financial Action Task Force (FATF) and its associated regional body, the Asian Pacific Group (APG) that it has undertaken the necessary steps to curb terror financing-related deficiencies by the May deadline.
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According to Hindustan Times, though FATF will eventually judge Pakistan on technical grounds, New Delhi plays a pivotal role in FATF’s assessment of Pakistan’s terror finance government, as it serves as co-chair of the APG Joint Group. The APG makes vital suggestions to FATF regarding the progress of its members.
FATF is dedicated to setting standards for battling money laundering and terror financing. across the globe. FATF identifies countries that do not have adequate regulations in place to counter money laundering and terror financing and places them on one of its two high-risk public documents.
The “grey list” includes monitored jurisdictions, for which FATF “prompts its members to consider the money laundering and terror finance risks arising from the strategic deficiencies of these jurisdictions.”
Greylisted nations have the opportunity to reform their systems through the completion of an action plan so that those wanting to transact in these jurisdictions can do so with higher confidence.
Those that fail to improve their policies may be moved to the “blacklist” of high-risk jurisdictions and could be subject to countermeasures, such as prohibiting the establishment of branches of foreign banks in Pakistan.
FATF calls on its members to apply “enhanced due diligence measures” on blacklisted nations, including procuring information on the source of funds of customers. Countries on the blacklist also have the opportunity to address their strategic deficiencies through an action plan.
FATF grey listed Pakistan in 2018 “for failing to act against Lashkar-e-Taiba and its suspected political front, Jamaat-ud-Dawa.” Lashkar-e-Taiba militants carried out the November 2008 Mumbai attacks, which killed over 160 people. Concerned that it might land on the grey list, Pakistan renewed its expired ban on Jamaat-ud-Dawa days prior to the February 2019 meeting, but this was insufficient.
In February 2019, the Pakistan-based terrorist group Jaish-e-Mohammad claimed responsibility for a bombing in Kashmir that killed at least 40 Indian soldiers. At its triannual plenary, a week after the bombing, FATF noted that Pakistan had only made “limited progress” on its action plan, stating Pakistan “does not demonstrate a proper understanding of terror finance risks” posed by active terrorist organisations. FATF named the Islamic State, al-Qaeda, Jamaat-ud-Dawa, Falah-i Insaniat Foundation, Lashkar-e-Taiba, Jaish-e-Mohammad, the Haqqani Network, and the Taliban as groups of concern. If Pakistan does not fully complete its action plan by October 2019, it risks being moved to the blacklist.
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Pakistan has been slow to implement its action items, often enacting legislation only when threatened with being placed on the blacklist. In early March, the Pakistani government announced it would crack down on institutions affiliated with Jamaat-ud-Dawa. The government reportedly “sealed or took over administrative control of several establishments” run by Jamaat-ud-Dawa and its charity, the Falah-i Insaniat Foundation. However, the government made no arrests, calling into question its commitment to aggressively eliminate the threat posed by these groups.
The Pakistani state reportedly supports Hafiz Saeed, the emir and founder of Lashkar-e-Taiba and Jamaat-ud-Dawa. Moreover, Bill Roggio, editor of Foundation for Defense of Democracies’ Long War Journal, reports that many Jamaat-ud-Dawa “charitable fronts operate inside Pakistan, with the knowledge and support of the state.” He notes, “Pakistan also routinely rounds up known terrorist leaders and places them under protective custody, only to release them when foreign pressure wanes.”
Even after major terror attacks, Pakistan failed to take meaningful action to curb these groups. In the wake of the 2008 Mumbai attacks, Pakistan claimed to detain the responsible groups’ members and shutter their offices, yet the offices were soon reopened and its leaders were released.
