The Financial Action Task Force (FATF), a 39-member multilateral body that acts as a “global money laundering and terror-financing watchdog”, is once again preparing to assess Pakistan’s compliance with its targets on Anti-Money-Laundering/Countering the Financing of Terrorism (AML/CFT). Pakistan has remained on its “grey list”, or the list of countries under “increased monitoring”, since 2018, after India presented evidence to prove the existence of state-funded terrorism within Pakistani territory. The last such assessment was done in October 2020, when FATF members decided that Pakistani authorities had made significant progress on several fronts. Nevertheless, they voted in favour of retaining Pakistan on the “grey list” due to its failure to provide tangible outcomes on issues such as conducting investigations and achieving prosecutions against those involved in terror financing. Pakistan has evidently shown its desperation to be removed from the “grey list”, as this title is making it increasingly difficult to secure financial aid from international lending organisations such as the Asian Development Bank and the World Bank. Its all-weather ally, China, has emerged as its pillar of strength, helping it return loans from countries like Saudi Arabia and helped Pakistan somewhat protect its struggling economy. That being said, even the most ardent supporter of Pakistan’s friendship with China would recognise the pitfalls of the Asian giant’s debt trap politics and the need for greater manoeuvrability that isn’t dependent on China’s “benevolence.” However, although Pakistan has made some overtures to redeem itself before the FATF, its efforts are widely recognised as superficial, making its prospects before the February meeting grow grimmer by the day.
Pakistan has been criticised by India and other countries across the world for using or leasing its territory as a breeding ground for terrorism and other related activities. Currently, over a hundred names on the United Nations Sanctions list are of Pakistani nationals. Yet, the country’s government claims to be working hard to tackle the loopholes in the current legal framework that allow it to be exploited for terrorism and terror financing. One such mechanism is the recently introduced “Raast”, literally translating to “direct way”, which aims to create a direct-pay system that seeks to curb the “off-the-books” transactions in Pakistan.
The government also claims to be targeting radicalisation through social reforms, such as changes in its education system, including madrassas. Furthermore, Pakistani authorities have conducted several arrests on charges of terror financing. Two such high-profile arrests were made just last week. The first was of Zaki-ur-Rehman Lakhvi, the Operations Commander of the Lashkar-e-Taiba (LeT) and one of the chief orchestrators of the 26/11 Mumbai attacks, and the second was of Maulana Masood Azhar, the Chief of the Jaish-e-Mohammad (JeM). However, these symbolic and infrequent crackdowns on terror financing, particularly given their suspicious timing, invariably attract distrust and are unlikely to be enough to hoodwink the FATF.
In fact, India was quick to label Pakistan’s arrest of Lakhvi as a “farcical action”, and rightly so, given Pakistan’s previous attempts to stymie international criticism by making high-profile arrests and introducing sweeping new laws targeting terror-financing. The same tactic was used in the run-up to the October 2020 FATF meeting. Just months before Pakistan was set to face the scrutiny of the Task Force, its legislature passed a law that aimed to crack down on terror financing. Around the same time, Pakistani authorities also arrested Hafiz Saeed, the founder of LeT. Demonstrating its lack of sincerity and commitment to counterterrorism efforts, however, by the end of November, sources reported that Saeed was covertly transferred from jail to his house in Lahore.
Islamabad has also been accused of providing luxurious treatment to several internationally declared terrorists, which has only generated further misgivings from FATF members. For instance, during Lakhvi’s seven years in jail, he was known to have served his sentence in relative comfort and is reported to have even fathered a child. Moreover, despite his clear and undeniable involvement in terror-related activities, Lakhvi secured bail in 2015 by paying Rs. 2,000,000, that too without presenting evidence for the source of these funds.
The reversibility of terror charges alongside the hospitality it provides terrorists with is demonstrates the Pakistani government’s unwillingness to prosecute such individuals as well as its clear ties to the organisations they hail from, be it JeM or LeT. Therefore, many suspect that Lakhvi and Azhar will be bestowed with the same benevolence. In fact, sources are already reporting that, in light of his many ailments, Azhar will be allowed to return to his “daily routine” following the FATF’s February meet.
Several other factors are likely to feature in the FATF’s discussion on Pakistan’s progress in cracking down on terror financing. For example, one of the parameters that Pakistan performed poorly on during the October 2020 meeting was the lack of cooperation amongst federal units against terrorism-related activities. The continued prevalence of this issue was highlighted during the recent judgement by the High Court in Sindh in which the court ordered the release of the four individuals accused of kidnapping and murdering American journalist Daniel Pearl in 2002. However, following severe criticism by the United States, the Sindh government nullified the order, showing the lack of coordination amongst the various branches and levels of government, which inhibits the implementation of a cohesive and collaborative counterterrorism framework.
Hence, given Pakistan’s history of papering over the increasingly rampant terror financing issue in its territory, the FATF is unlikely to fall victim to its false narratives. Currently, out of the 39 members, only three—namely, China, Turkey, and Malaysia—are likely to support Pakistan in its bid to be taken off the “grey list”; however, Pakistan requires at least 12 votes to be successful.
Alongside its lack of commitment to counterterrorism, Pakistani Prime Minister Imran Khan’s vocal opposition to French President Emmanuel Macron’s crusade against Islamic radicalism is also likely to harm Pakistan’s chances of being removed from the “grey list”. During his visit to India, Emmanuel Bonne, Macron’s top advisor, said that France’s relations with Pakistan are currently at a “historic low.” Not only is France a member of the FATF, but it also holds a significant influence over several countries in the West, which is likely to obstruct Pakistan’s attempt to secure the required 12 votes. Hence, France is expected to support India, who has been spearheading the campaign against Pakistan in the FATF.
Furthermore, India’s own efforts to increase its influence in the international community, combined with its recent inauguration into the United Nations Security Council as a non-permanent member, is likely to strengthen its support from the grouping. Moreover, even if Pakistan secures the 12 votes, it will still face the scrutiny of a task force, which will assess the on-ground implementation of the changes that Pakistan claims to have successfully implemented. Only once the task force is convinced of tangible and significant improvements in Pakistan’s handling of terror financing in its territory will it be removed from the “grey list.”
Another issue that continues to burden the Pakistani government is the overpowering influence of the Pakistani Army on the country’s political system, which is also a key feature of the ongoing Opposition-led protests in Pakistan. The Army’s leverage over elected leaders is particularly concerning due to its close ties with terror groups and has acted as a major obstacle in any genuine attempts to hold terror organisations and their members accountable for their actions. The threat of social and economic crises is further compounded by Pakistan’s continued designation as a state sponsor of terrorism by the FATF, which prevents it from receiving much-needed financial aid and worsens the severity of these crises. Against this backdrop, the Pakistani government is left between a rock and a hard place, where it must continue to appease its army while still seeking to secure financial stability and social harmony.
Now, with the sword of the upcoming FATF meet hanging over PM Imran Khan’s administration, the government is facing a threat like never before. While several Pakistani commentators have applauded Pakistan for its progress on the issues, such superficial solutions are unlikely to rescue it from the mess it has gotten itself into. With about a month left before Pakistan is once again brought before the FATF, can it successfully redeem itself before the grouping and finally escape the “grey list” tag? Or will it continue to rely on cosmetic tools and be content with merely evading the “black list”?
Pakistan Will Fail in Its Bid to Be Removed From the FATF’s “Grey List”. Here’s Why.
Despite making several high-profile arrests and passing relevant laws, Pakistan’s attempt to get off the Financial Action Task Force’s “grey list” is unlikely to succeed.
January 14, 2021
Hafeez Muhammad Saeed, the founder of Lashkar-e-Taiba (LeT). SOURCE: REUTERS