Pakistan is in trouble with the Financial Action Task Force again. As the FATF’s working group and plenary sessions started on Monday, Pakistan has been pulled up again for its failure to properly investigate the case against three key LeT leaders.
Last year, after facing intense pressure from the multinational financial watchdog and the US, Pakistan finally arrested and prosecuted Lashkar-e-Taiba (LeT) founder Hafiz Saeed and some of his close aides in several terror financing cases. However, weeks after the FATF session, Islamabad botched up the investigation against LeT leaders — Malik Zafar Iqbal, Yahya Mujahid and Hafiz Saeed’s brother-in-law Abdul Rahman Makki — which led to the collapsing of the case against the terrorists.
After being put in the FATF “grey list” since June 2018 for shortcomings in its counter-terrorist funding and anti-money laundering regimes, Pakistan’s imports, exports, remittances and access to foreign credit has been in shambles. Prime Minister Imran Khan has been unsuccessfully lobbying for the country to be taken off the ignominious list, but to no avail.
In its 2020-2021 Annual Report, FATF said of Pakistan that “The country had made significant progress in strengthening counter-terrorist financing measures, as per its original action plan. However, the APG’s [Asia-Pacific Group on Money Laundering] 2019 mutual evaluation identified additional deficiencies with the country’s anti-money laundering measures.”
Islamabad’s failure lies in its half-hearted attempts at curbing terrorism. Hafiz Saeed’s arrest was an eyewash and the smokescreen fell apart when the world saw the cases against LeT leaders collapsing. Further, Pakistan has been resolutely evading to take action against groups like the Jaish-e-Mohammed (JeM), its leader Masood Azhar and other LeT leaders.
Azhar, who has been designated a global terrorist by the UN in 2020, is wanted for his association with al-Qaeda and his role in financing, planning and facilitating terrorist acts by the JeM. He is responsible for the deadly cross-border attacks on India, including the Pulwama attack in February 2019.
When the subject has been broached in the international forums, Pakistan has always been evasive, and in its last representation to the FATF, Islamabad said that Azhar was untraceable and declared a proclaimed offender. Even as the Pakistan authorities were claiming ignorance on his whereabouts, the JeM leader kept cropping up in media reports emanating from Pakistan. There were reports that he had met the Taliban leadership in Afghanistan, seeking their support for his operations in Kashmir.
Pakistan’s efforts to investigate and prosecute leaders of UN-designated terror groups in order to counter terror financing will be assessed during meetings of the Financial Action Task Force (FATF) that began in Paris on Monday.
The working group and plenary meetings of FATF will continue till March 4. Pakistan’s fate on whether it is to be retained in the grey list or the list of countries under increased monitoring (to which it was added in mid-2018) will be announced after the meetings.
Political watchers and experts believe that Pakistan is set to be retained in the grey list after it has failed to address serious deficiencies related to money laundering, as mandated by the FATF. According to the FATF President, Pakistan will stay on the grey list until it completes all of the items on the initial action plan agreed to in June 2018, as well as all of the items on a parallel action plan issued by APG — FATF’s regional partner — in 2019. But there seems to be little likelihood of the country being included in the “black list”, which would mean harsher economic sanctions and greater scrutiny of financial transactions. So far, only North Korea and Iran are included in the black list.
However, the cash-strapped economy of Pakistan which has been in shambles with the deteriorating foreign exchange cannot afford to be on the grey list any longer. While Imran Khan has been seeking international support to get off the grey list, it might be prudent to take a closer look at what’s happening on the country’s soil as far as terror activities are concerned.
