Global anti-money laundering watchdog keeps up pressure on Islamabad even after it meets almost all its conditions.
The Financial Action Task Force decision to keep Pakistan in the list of countries that need to do more to curb terrorist financing has raised concern about the Paris-based anti-money laundering monitor being used as a geopolitical tool.
Over the years, Islamabad has updated its laws to curb terrorist financing, forced banks to better implement KYC (Know Your Customer) protocols and even taken action against Kashmir-centric militant groups.
Yet the FATF on Friday said Pakistan will remain on the list of nations that require increased monitoring on the issue of terror financing.
That comes even as FATF itself acknowledged that Pakistan has complied with 26 of the 27 demands that were set out in an action plan such as making it harder for criminals to move illicit funds.
“On what grounds are they doing this to us? Are they trying to put pressure on Pakistan because of what’s happening in Afghanistan,” Muzzammil Aslam, CEO Tangent Capital, a financial and economic advisory think-tank, told TRT World.
“Has Korea or China met all the FATF requirements? Why are they not on the FATF grey list?”
It is ridiculous to keep Pakistan on the grey-list after acknowledging our compliance with almost all the action points. Will Pakistan eventually move straight to some FATF gold-list after all this compliance?! Different standards for different countries. 🇵🇰— Taimur Malik (@taimur_malik) June 25, 2021
FATF’s decision matters as it increases the risk profile of a country, which is under monitoring, making it costly for the government and private sector to raise funds from international capital markets.
Being on the grey list also means that domestic and multinational banks have to spend more resources on compliance and money laundering staff, who have to be extra vigilant in detecting fraud and terror financing transactions.
Aslam said every country has to take concrete steps to stop money laundering that’s used by terror groups but the way FATF has dealt with Pakistan smacks of double-standards.
In its review, which ended on Friday, the FATF imposed six new conditions on Pakistan, something that came as a shock for many Pakistanis.
Pakistan’s top leadership has also voiced dissatisfaction over the FATF decision.
"In my view, in such a situation, there is no reason to keep Pakistan on the grey list," Foreign Minister Shah Mehmood Qureshi said.
"It remains to be seen whether this forum (FATF) is being used for political purposes."
In 2018, FATF asked Pakistan to take a number of steps to get out of the grey list. The one condition out of the 27 that is yet to be met has to do with the investigation and prosecution of UN designated terrorist groups and leaders.
But how swift the prosecution is depends on Pakistani courts and not the government, experts said.
FATF is now clearly being used as a political tool against Pakistan. According to FATF reports only 12 member countries are fully compliant. Pakistan is doing far better than even many 39 members countries. Shifting goalposts for Pakistan is simply shameless.— Abdul Basit (@abasitpak1) June 26, 2021
Arch rival neighbour India has long lobbied FATF to impose even stricter conditions on Pakistan especially when it comes to Hafiz Saeed, leader of the banned Kashmir-centric militant organisation.
Saeed, who was sentenced to 15 years in jail on money laundering charges earlier this year by a Pakistani court, is regarded by thousands as a hero.
“This was kind of expected and that’s why the stock market was prepared for this,” Saad Bin Ahmed, a head of Arif Habib, a leading brokerage house based in Karachi, told TRT World about the FATF statement.
“The FATF decision comes at a time when the US is trying to make an exit from Afghanistan. And it needs air bases in Pakistan as part of their exit strategy.”
Washington wants to use Pakistani airspace to monitor and target terrorist organisations such as Al Qaeda in Afghanistan.
But Prime Minister Imran Khan has categorically refused to grant any concession in this regard.