Pakistan is hoping for some reprieve as the international watchdog Financial Action Task Force (FATF) begins meetings on Monday in Berlin ahead of its plenary session on June 14-17. Announcing the meeting, the FATF secretariat said that delegates would discuss “the progress made by some jurisdictions identified as presenting a risk to the financial system”, referring to entities on the grey list including Pakistan and 22 other countries.
According to media reports in Pakistan, the new Pakistani PMLN-led government is pulling out all stops in sending its Minister of State for Foreign Affairs Hina Rabbani Khar to lead the delegation this week that will make Pakistan’s case for being taken off the “grey list” of countries of “jurisdictions under increased monitoring”, four years after it was brought back on the list in June 2018.
In particular, government sources quoted in the reports on Aaj and ARY media networks indicate that Pakistan is confident it has “completed” its task list, particularly after the sentencing of Lashkar-e-Toiba chief Hafiz Saeed in April 2022 for a term of 32 years, adding to a previous term of 36 on several counts of terrorism and terror financing.
Ministry of External Affairs (MEA) officials declined to comment on FATF deliberations, which are held in complete secrecy. However, at least two diplomatic sources confirmed to The Hindu that this time around, there is “significant momentum” amongst the US and its “five eyes” intelligence alliance of UK, Canada, Australia and New Zealand, as well as some European countries to begin the process of removing Pakistan from the grey list. This would mean accepting that Pakistan has completed two separate task lists of 27 tasks and 7 tasks, on action against terror financing and money laundering respectively, and proposing an in-country “site visit” by FATF delegations to confirm the findings. If that process goes smoothly, the sources said that a final call on removing Pakistan from the grey list would be taken at the next FATF plenary October 16-21 this year.
The FATF’s decision is also being watched for its political impact, as if Pakistan is judged positively in the session this week, it would be a significant shot in the arm for Pakistan PM Shehbaz Sharif’s government, that is grappling with financial restrictions from the grey listing as well as tough negotiations with the IMF on a bailout. Experts have pointed to the warming of ties between Pakistan and the US after they were virtually frozen all of last year as another positive sign, especially after American Secretary of State Antony Blinken invited the new Foreign Minister Bilawal Bhutto to attend a special UN session and held bilateral talks in May 2022. When asked about the FATF listing, Mr. Bhutto had said in New York that his government was committed to action against terrorism and extremism, which he called a “a consistent, long term and existential threat to all of us”.
The sources pointed to a number of steps taken by Pakistan in the past year that have been taken into account by the latest FATF and Asia Pacific Group (APG) reports that will be discussed during the session, including the conviction of Hafiz Saeed, and prosecution of Masood Azhar and arrest of about 300 other designated terrorists, the seizure of more than 1,100 properties owned by terror groups under the guise of running educational, medical and charitable trusts, ordinances and changes in law to bring Pakistan’s anti-Terrorism Act in line with international designations for terrorists as well as changes to money-laundering laws, and the freezing of bank accounts belonging to terror groups and their leaders. New Delhi has been sceptical of the efficacy and permanence of Pakistani actions on terror taken thus far, and its views will be taken into account as the consensus-led FATF as well.
Pakistan was previously on increased monitoring lists in 2008-2009 and 2012-2015. In 2015, it was removed from the grey list by international consensus within the 39-member grouping that India is a part of, and placed back on it in 2018 over a number of deficiencies in its legal and financing system, apart from acting as the safe havens for UN-designated terror groups like Al Qaeda, Lashkar e Toiba (LeT) and Jaish e Mohammad (JeM). While Pakistan was adjudged as making “significant progress” and completing 26 of 27 tasks last year, the FATF held that its failure to prosecute the groups and its leaders like Hafiz Saeed and Masood Azhar was the one remaining task on that list.
“The FATF encourages Pakistan to continue to make progress to address, as soon as possible, the one remaining item by continuing to demonstrate that Terror Financing investigations and prosecutions target senior leaders and commanders of UN-designated terrorist groups,” the FATF’s statement in 2022 after the last plenary said. On its second task list too, Pakistan was judged as having completed six out of seven actions on money laundering in the country, while failing to complete money-laundering prosecutions.
