Global anti-terror body FATF gives Pakistan till February to curb terror funding
The Financial Action Task Force (FATF) on Friday warned Pakistan it would be placed on the multilateral watchdog’s blacklist if it fails to improve its counterterror financing operations by February 2020, highlighting the country’s failure to crack down on fund-raising by UN-designated terrorists.
The FATF concluded during its plenary meeting in Paris that Pakistan had failed to deliver on 22 out of 27 items in an action plan drawn up after the country was placed in the grey list in June 2018. Inclusion in the black list will entail harsher sanctions and greater global scrutiny of financial transactions, which could hit investments and business.
Briefing the media after the meeting, FATF president Xiangmin Liu of China made it clear the time had come for Pakistan to deliver on the action plan, the deadline for which was September.
“Pakistan needs to do more and it needs to do it faster. Pakistan’s failure to fulfil FATF’s global standards is an issue we take very seriously,” Xiangmin said.
“As a result, the FATF is giving this very clear warning — if, by February 2020, the country has not made significant progress, we would consider further actions, which potentially include placing the country on the... black list.”
The FATF listed 10 steps it expects Pakistan to take to counterterror financing, including targeted actions against UN-designated global terrorists such as Lashkar-e-Taiba founder Hafiz Saeed and Jaish-e-Mohammed chief Masood Azhar.
Without naming specific terrorists, an official statement said Pakistan must effectively implement targeted financial sanctions against all terrorists designated under UN Security Council resolutions 1267 and 1373 and those acting on their behalf, including preventing the raising and moving of funds, freezing assets, and prohibiting access to funds and financial services.
People familiar with the developments said Pakistan was saved from being included in the black list because of the stance adopted by China, Turkey and Malaysia; opposition by three of the 39 members of FATF is enough to block a move within the watchdog.
India’s global partners in the fight against terror, such as France, worked hard behind the scenes in recent days to ensure Pakistan didn’t get off lightly. Western diplomats said France worked with European partners and the US to ensure there was an “objective assessment” of Pakistan’s actions vis-a-vis other countries on the grey list, and that the FATF’s official statement reflected the “serious concerns” of the world community.
“The objective assessment showed Pakistan delivered on only five of the 27 items in the action plan. Since there was no consensus on black listing, we ensured there were incentives for Pakistan to act before the next plenary,” said a diplomat.
The diplomats said France ensured the FATF statement was strongly worded, and included a deadline for “progress across the range” and an explicit threat of action if Pakistan failed to deliver again.
The FATF statement was scathing in its indictment of Pakistan. “All deadlines in the action plan have now expired,” it said.
The FATF said it “again expresses serious concerns” with Pakistan’s lack of progress in tackling terror financing risks, including deficiencies in showing understanding of transnational risks and its failure to complete its action plan within the agreed timelines.
If “significant and sustainable progress” is not made “across the full range of its action plan” by the time of the FATF’s next plenary in February, the body will take action, which can include calling on the watchdog’s members and urging all jurisdictions to advise their financial institutions to give “special attention to business relations and transactions with Pakistan”. Pakistan’s ministry of finance said in a statement on Friday that the country’s delegation reaffirmed its political commitment to fully implement the action plan.
The 10 steps that the FATF expects Pakistan to take to counter terror financing and money laundering also include demonstrating proper understanding of terror financing risks posed by terror groups, compliance of actions by financial institutions, enforcement action against illegal money transfer services, improving interagency coordination, demonstrating prosecutions result in effective and dissuasive sanctions, and depriving facilities and services controlled by designated terrorists of resources.
The FATF’s findings were in line with a report earlier this month by one of its regional affiliates, the Asia Pacific Group (APG), which said Pakistan was fully compliant with only one of 40 recommendations to counter terror financing and money laundering.
FATF president Xiangmin dismissed speculation that the working of the body had been politicised, saying, “We have identified serious weaknesses in Pakistan’s terrorist financing and anti-money laundering framework, and we take each member’s weaknesses in their national framework very seriously and we hold them to the same standards.”
Every member of the FATF has an equal voice and the watchdog treats every country equally and holds them to the same standards, he said.
However, Rajiv Dogra, a former diplomat who served in Pakistan, said the country had got off lightly.
“China has stood by Pakistan, and Malaysia and Turkey helped. The FATF president’s so-called warning is for cosmetic effect. North Korea and Iran continue to be on the black list but they have not faced major accusations of indulging in proxy wars,” Dogra said.