China did not want to ‘lose face’ by backing Pakistan on FATF blacklist: Report
The grey list identifies the “jurisdictions with strategic anti-money laundering/countering the financing of terrorism deficiencies for which they have developed an action plan with the FATF”.world Updated: Feb 26, 2018 20:11 IST
China decided against backing Pakistan over its efforts to counter terror financing at the plenary meeting of the Financial Action Task Force because it did not want to “lose face by supporting a move that’s doomed to fail”, according to a media report on Monday.
Pakistan is set to return to a blacklist of the global financial watchdog in June after it prepares an action plan on eradicating terror financing , officials told the Dawn newspaper.
When the FATF took up a US-backed move to include Pakistan in the “grey list” on February 22, the Chinese informed Islamabad that they were opting out as they did not want to “lose face by supporting a move that’s doomed to fail”, an official source was quoted as saying by the paper.
“Pakistan appreciated the Chinese position and conveyed its gratitude to Turkey for continuing to support Islamabad against all odds,” the source said.
During initial discussions at the Paris plenary of the FATF on February 20, China, Turkey and Saudi Arabia, which was representing the Gulf Cooperation Council (GCC) as it is not yet a full member, opposed the move to place Pakistan on the watchlist.
But the US pushed for an unprecedented second vote on Pakistan, which was held on February 22 by which them Washington had convinced Riyadh to give up its support to Islamabad in return for a full FATF membership.
This left only two countries – China and Turkey – in the Pakistan camp, one less than the required number of three members to stall a move. The Dawn reported that the Chinese also informed Pakistan that they were opting out.
The paper reported that on Friday, the group issued an updated grey list, along with a statement announcing the decisions taken at the plenary session, and Pakistan was not on the list. Officials in Islamabad interpreted this as a “breather”, although it’s more of a technical detail.
The grey list identifies the “jurisdictions with strategic anti-money laundering/countering the financing of terrorism deficiencies for which they have developed an action plan with the FATF”. Pakistan has not yet worked out the proposed plan with the FATF and that’s why it’s not on the list.
Between now and June, Pakistan will have to work out details of the evaluation process with the FATF and a failure to do so could trigger another process, which may push Pakistan on the black list of wilful violators, the paper quoted officials as saying.
“The move was against the understanding given to Pakistan that Islamabad will be asked to work with the FATF on an action plan, before the listing process starts,” an official source told Dawn. After the Feb 20 meeting, Foreign Minister Khawaja Asif sent out a celebratory tweet, saying that Pakistan had won a three-month reprieve.
Hours after the tweet, US state department spokesperson Heather Nauert indicated at a news briefing in Washington that Islamabad’s celebrations were premature. She said the Paris plenary was not over yet and it would hold another meeting on Pakistan on Feb 22, as it did.
She also mentioned Hafiz Saeed and his activities while detailing US complaints against Pakistan and the sources that spoke to Dawn after the Feb 22 meeting said that indeed Saeed and his “charities” were top on the list of the groups that the FATF wanted Pakistan to act against.
Pakistan did make some laws before the Paris meeting that would allow it to act against these groups but apparently that was not enough to convince the FATF.
Pakistan was first put on the FATF’s grey list in 2012 but was removed in 2015, after the FATF certified that the country had done enough to counter terror financing.
Now, Pakistan will have to follow the same process that it did in 2015, starting with an action plan that Islamabad is required to submit in May. If the FATF approves the action plan in June, it will make a formal announcement about placing Pakistan on the grey list. Should Islamabad fail to submit an action plan, or if the FATF does not accept it, the group can place Pakistan on its black list, along with North Korea and Iran, the paper said.