Pakistan at FATF  

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  • How long can allies continue to come to our rescue?

Outgoing FATF President Marshall Billingslea has warned that Pakistan’s blacklisting is absolutely a possibility as it lacks in almost every respect of a 27-point action plan agreed in June 2018. Pakistan, he maintains, was cautioned in February that they had missed almost all of their January milestones and were urged not to fail to meet the targets in May. Pakistan again missed its May milestones. It has four months to cover its deficiencies, failing which it could be declared black. This would severely cripple and isolate the country financially, resulting in a downgraded credit rating and denying it loans and development assistance.

Pakistan’s ambassador to the USA has complained about the fitness of the FATF jury which is to pronounce judgment on Pakistan’s performance on the action plan. One can understand that India’s hostility and US pressures might have played a role into the negative evaluation of Pakistan’s structural deficiencies in anti-money laundering (AML) and combating financing of terrorism (CFT). But is this the only cause why Pakistan remains in the grey list and has just averted the classification as black by the skin of its teeth?

Pakistan started taking measures early this year to choke the financing of banned outfits. In some cases the measures were inadequate or half-hearted as in cases these outfits were reported to be still collecting funds under different names. This showed either lack of capacity or sheer slackness. Hundi and hawala operators also continue to function on the sly. Some of the highly publicised cases in Pakistan’s courts involving money laundering indicate the country has yet to do a lot to improve the performance of its financial watchdogs. There is a perception that while we are quick to undertake legal and regulatory reforms— essentially all paperwork— we remain abysmally weak in operational reforms.

Pakistan was saved this time from being declared black as China, Malaysia and Indonesia came to its rescue. While three members can stop a country from being declared black, this cannot go on for an infinite period. China could place a hold on listing Maulana Masood Azhar as designated terrorist only for a few years. Pakistan needs to do its homework efficiently instead of overburdening its allies.