- FATF spokesperson says organisation not responsible for media reports pertaining to Pakistan’s inclusion to the list
- List includes Ethiopia, Iraq, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, Vanuatu and Yemen.
- Finance adviser says Pakistan won’t be significantly affected by the list as fundamentals of economy were strong
PARIS: In spite of the media reports regarding Pakistan’s inclusion into the Financial Action Task Force (FATF) grey-list, Pakistan has not been included in the money-laundering watchdog’s list that pertains to countries with strategic deficiencies’.
The countries in the list issued by the FATF on February 23 include Ethiopia, Iraq, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, Vanuatu and Yemen.
Neither public statement–that contains Iran and North Korea– issued by the FATF nor the statement pertaining to the outcomes of the plenary meeting features Pakistan’s name.
However, it remains ambiguous if Pakistan would be included in the list, as a statement on the website of the watchdog says: “A number of jurisdictions have not yet been reviewed by the FATF. The FATF continues to identify additional jurisdictions, on an on-going basis, that pose a risk to the international financial system.”
Earlier in the day, there were reports of Pakistan’s inclusion in the list, with Reuters quoting sources that Pakistan has been placed on the FATF list. “A global money-laundering watchdog [FATF] has decided to place Pakistan back on its terrorist financing watchlist,” the news agency said.
After the conclusion of the task force’s plenary session, the FATF spokesperson added that the FATF was not responsible for reports which claimed Pakistan’s inclusion in the list. She said: “A final decision will come after the meeting reviewing the matter concludes.
The FATF session in Paris, which concluded on Friday, was being held to review proposals that include putting Pakistan back on a list of countries which have failed to prevent terrorist financing. The United States (US) and Britain had put forward a motion to place Pakistan on the FATF terrorist-financing watch list. If adopted, the resolution would place Pakistan on the FATF’s grey-list.
Responding to the reports, Interior Minister Ahsan Iqbal denied the report, saying that the official FATF decision still has to come, therefore “we should not speculate till official statement is released”.
No official intimation of #FATF decision yet. We should not speculate till official statement is released.
— Ahsan Iqbal (@betterpakistan) February 23, 2018
Meanwhile, Adviser to Prime Minister on Finance Miftah Ismail said that Pakistan won’t be significantly affected by being put on the list as fundamentals of the economy were strong.
“Nothing is going happen before June…[but even then]nothing really will happen to Pakistan. It is not a big issue,” he told a local media outlet.
The adviser said that Pakistan was placed on the list between 2012 and 2015 too but the stock market still grew by three per cent.
Ismail added that Pakistan already has strong anti-money laundering measures in place.
PAKISTAN CONCERNED OVER THE MOVE:
Meanwhile, Pakistan Foreign Office Spokesperson Muhammad Faisal had said that a request to include Pakistan in the grey-list was made earlier in January by the United States and Britain. “Pakistan has serious concerns over the motion moved by US and UK at the Financial Action Task Force to put the country on the grey list,” the FO spokesperson had added.
The reservations tabled before the FATF are those of America, the spokesperson added. He specified that Pakistan has already taken action against most of the reservations, including implementing the National Action Plan (NAP).
Separately, in the weekly news briefing, the FO spokesperson expressed his surprise over the recent US intelligence reports that Pakistan is drifting away from Washington.
The spokesperson pointed out that the US took several unilateral steps in recent months which have actually impacted the relationship. It is for the US to rebuild the trust.
Regarding the motion moved by the US and the UK at the FATF to put the country on the greylist, he pointed out that most of the concerns by the US regarding deficiencies in anti-money laundering and combatting the financing of terrorism had already been addressed in 2015 when Pakistan got an exit from the greylist.
Earlier this week, Foreign Minister Khawaja Asif had said that Pakistan had been given a three-month reprieve before being placed on the list, which could hamper banking and hurt foreign investment.
Asif had tweeted that Pakistan’s “efforts have paid (off)” during a Tuesday meeting on the US-led motion, suggesting there was “no consensus for nominating Pakistan”.
He had also suggested the meeting proposed a “three months pause” and asked for the Asia Pacific Group, which is part of FATF, to consider “another report in June”.
“Grateful to friends who helped,” Asif had added.
On the same day as Asif’s tweet, The Wall Street Journal had named China, Turkey and Saudi Arabia as the ‘friends’ who had come forward to rescue Pakistan, saying that the three countries had blocked the US’s motion to put Pakistan on the list.
Following the remarks of the FM, the US State Department had dismissed the claims made by Asif that it had granted the country a reprieve over a watch list vote, stating that it has yet to take a decision on the matter.
IMPACT ON PAKISTAN:
Pakistani officials and diplomats say that being put on the FATF watchlist could deal a blow to Pakistan’s economy, making it harder for foreign investors and companies to do business in the country.
Military successes against militants and massive Chinese infrastructure investments have restored some vim to an economy hobbled by a long-running religious insurgency and wrecked by the 2008/09 global financial crisis.
Officials are aiming for economic expansion to hit six per cent this fiscal year (July-June) and Prime Minister Shahid Khaqan Abbasi’s ruling party will want to avert a slowdown in the lead up to a general election due in about six months.
Being placed on the FATF watchlist carries no direct legal implications, but brings extra scrutiny from regulators and financial institutions that can chill trade and investment and increase transaction costs, according to experts.
“Others might elect to avoid Pakistan altogether, viewing the legal risks associated with doing business there to outweigh any economic benefits,” he said.
According to the Interior Minister Ahsan Iqbal, it would be counterproductive to put Pakistan on the watch list as it would hurt its capability to fight terrorism.
“This time (the effects) would be even greater because there are other pressures on Pakistan,” political commentator and retired Lt Gen Talat Masood told Arab News, speculating on what might happen should Pakistan be included on the watch list again.
“Pakistan’s balance-of-payments position is very adverse at the moment and internal stability is not good. It will have a greater impact than it had last time,” he continued, urging the government to take “appropriate measures” to combat the imminent danger of sanctions.
Senior economist Dr Syed Nazre Hyder described the potential impact of Pakistan’s inclusion on the watch list — should it happen — as “near lethal.” He pointed out that the cost to banks’ customers will rise, investors in the international capital market would request a much higher rate of return from Pakistan, and multilateral financing organizations would add risk premiums on any money borrowed.
Furthermore, financial experts fear the International Monetary Fund (IMF) may reject any loan extension Pakistan might request as a bailout to curb its widening trade deficit or offer a new deal with stricter guidelines dictated by the US and the European Union.
“Pakistan will need a loan to pay off its debt burden,” Hyder told Arab News. “If it’s included on the list, the country will face a serious challenge sourcing funds for repayment leading to the possibility of default. This would cripple Pakistan economically.”