Pakistan has always faced both sides in the FATF: eliminating any efforts towards blacklisting and eliminating the grey list.
Islamabad has been struggling to get out of the grey list of the Financial Action Task Force (FATF) since 2018. However, indoor and outdoor spaces have never helped. Opposition groups called for and tried to disrupt or at least delay the government’s legislative process – FATF. Apart from that, Pakistan’s biggest Opponent India has been urging to keep Islamabad on the grey list and actually move it to a more closely monitored area – blacklist.
A special FATF meeting is scheduled for October 21-23 in Paris. Will the decision in the next session be made fairly? Or will it be placed on a global political level, which puts limits on the chances of Pakistan getting out of the grey list?
For the past two decades the Pakistani government and the public have been suffering from military attacks. It has served as a predominant state in the US-led war on terrorism. Even today, its armed forces are engaged in regular battles. But despite all its sacrifices, Islamabad has failed to gain enough support from the international community to help the country get out of the grey list.
Pakistan’s financial system consists of built-in gaps, which are easily used in currency trading. Apart from that, the re-alignment of the global strategic position has given its opponents, including India, the opportunity to double the FATF list.
The coming storm
It was 2018 when the FATF ranked Pakistan on its grey list for the second time and ordered it to implement a 27-step plan, including a new law of banning terrorist financing and money laundering. If the country fails to comply with the requirements of the application, it will be transferred to the blacklist. This could be a catastrophe for the faltering world economy and financial assistance from major international financial institutions, such as the IMF, the World Bank, and the Asia Development Bank.
Qureshi contacted his Saudi, Turkish and Malaysian counterparts and asked for support from the FATF meeting. Indeed, with the help of its partners in the forum, Pakistan can successfully avoid to enter into the blacklist. Its exit from the grey list, however, is highly dependent on the views of US, UK and European countries regarding its compliance with FATF rules. Without their support, Pakistan will not be able to get the votes of 12 of the 39 FATF members, needed to be removed from the grey list.
And, of course, Pakistan’s top political party seems to be less sensitive to the current and alarming challenges in the country. Opposition groups called for a boycott of the by-elections in parliament. Much of it in the senate is a major obstacle to the smooth rules of curbing money laundering.
Opposition parties have stated they will not run in the by-elections. Both the leading political parties — the PML-N and the PPP – have been nominated for alleged funding, such as former President Asif Ali Zardari and former Prime Minister Nawaz Sharif.
Hopes of getting out of the grey list
However, the government has been able to amend 15 laws to improve its international standards system as required by the FATF. It also began to take action against local militias, as the JuD and the government imposed their mobile and immovable assets.
With the adoption of the laws, the government gained some confidence in its removal from the grey list. On October 10, Foreign Minister Shah Mehmood Qureshi expressed his hope that the country would soon be out of the FATF poor list.
The Asia-Pacific Group on Money Laundering (APG), while acknowledging Pakistan’s progress in following two of FATF’s 40 recommendations on effective anti-money laundering and anti-money laundering (AML / CFT) programs, has stopped recommending its exit from the grey list.
Last month, its follow-up report (FUR) in Pakistan reported, “Following APG third round procedures, Pakistan will continue to follow up on progress, and will continue to report to APG on progress in strengthening its implementation of AML / CFT Measures.”
In summary, Pakistan has always faced both sides in the FATF: making any efforts towards blacklisting and removing itself from the grey list.
Many recent, legal, regulatory and operational measures will save it from being blacklisted at the next virtual conference, but it looks like Pakistan will still remain on the grey list.