- Why no focus on Arab world charities?
In its latest review, the Financial Action Task Force conceded that Pakistan has addressed 21 of the 27 items of its Action Plan, though te Indian media would have us believe that only 13 of the listed shortcomings have been rectified.
There was no voting, but Indian media reported that even Saudi Arabia voted against Pakistan. It is however true that Islamabad has been given four more months to complete swiftly its full action plan by February 2021.
The Financial Action Task Force has ostensibly noble objectives. It provides a `legal’ regulatory framework for muzzling the hydraheaded monster of money-laundering by identifying loopholes in the financial system and plugging them.
Aside from its declared objectives, the FATF has become a diplomatic tool to coerce or pamper countries, accused of financing terrorism or facilitating money laundering. The FATF is more interested in disciplining a state like Pakistan, not toeing US policies, than in checking money laundering.
The consequences of being in the grey list may entail economic sanctions and difficulties in obtaining loans from international donors like International Monetary Fund, World Bank and Asian Development Bank. The trade-and-aid difficulties may retard economic progress of a country.
Political considerations, not primary objectives, determine voting behaviour at FATF. Pakistan has not been able to speed up further enactments for a host of difficulties including opposition’s reservations. Pakistan needs 15 out of the FATF’s 39 members to exit the “grey list”
The US Senate Banking Committee reviewed money laundering and terror financing in the Middle East. During the review they looked at the situation in India, and Pakistan also. India has a much larger GD P and a much larger and wealthier Diaspora, particularly in the Middle East and the USA. The hawala and other money transfer practices among Indians and Pakistanis are similar. Yet the FATF keeps Pakistan in focus but looks the other way when it comes to India.
US Assistant Secretary of State for Economic and Business Affairs Anthony Wayne told the Committee that in India, two accounts belonging to terrorist individuals/entities had been identified. However, the Indian government had not frozen any assets. Wayne noted that India’s Prevention of Money Laundering Act criminalises money laundering and requires te reporting of transactions valued at over $23,000.
A recent report by the International Consortium of Investigative Journalists has blown the lid off the suspicious financial transactions by Indian banks, public and private sector companies. The ICIJ report based on Financial Crimes Enforcement Network (Finsen) files represent less than 0.02 per cent of the more than 12 million suspicious activity reports that financial institutions filed with Finsen between 2011 and 2017.
Not only banks but public and private sector companies were also the culprits. They include Hindustan Aeronautics Limited, Bhutan Steel Limited, Bharti Airtel and Essar. Indian banks figure in over 2000 transactions valued at over $1 billion between 2011 and 2017.
Pakistan is a bête noire and India a protégé at FATF only because of stark geopolitical interests. Otherwise the money laundering situation in India is no less gruesome than in Pakistan. India has even been the conduit of ammunition to the Islamic State. A study conducted by Conflict Armament Research had confirmed that seven Indian companies were involved in supplying over 700 components, including fuses or detonating cords, used to construct IEDs.
FATF was scheduled to review India’s money laundering and terrorist financing regime over a 10-year cycle in September-October 2020. However, this has been postponed to January-February 2022, ‘ostensibly’ in view of the Covid-19 pandemic. International watchdogs look the other way for India.
Pakistan’s current predicament negates sentiments expressed in the US Senate’s Banking Committee about Pakistan.A Senator said, “ Turning to Pakistan, let me just note that we, of course, all welcome the concrete actions that it has taken to implement its U.N. Security Council resolutions, the freezing of over $10 million of Al-Qaeda assets, and the terrorists they have apprehended, including Abu Faraj al-Libbi, Al Qaeda’s operational leader. We are also encouraged that Pakistan is showing increased concern about the infiltration of terrorist groups into charitable organizations.”
Pakistan has successfully convicted four designated persons and two other senior leaders, and terror financing cases have been instituted against 11 designated persons (61 cases) and eight other leaders (37 cases).
The Anti-Terrorism (Third Amendment) Act, 2020 enables law-enforcement authorities to carry out undercover operations, intercept communications and access computer systems. Detention period of 60 days may be extended to another 60 days. The opposition wants the interception clause to be omitted lest there should be invasion of privacy.
Through the Anti-Money Laundering (Amendment) Act, anti-money-laundering laws are to be brought in conformity with international standards prescribed by the FATF. Proposed punishment for money laundering is up to ten years, fine extendable to Rs 25 million, plus forfeiture of property, when done by a natural person, or Rs 100 million for a legal person.
A National Executive Committee is composed of the finance and foreign ministers and others mentioned in Schedule-II, has been constituted. The Committee makes recommendations to the government on effective implementation of the Act, determination of offences, application of countermeasures to combat money laundering and so on.
There is a Financial Monitoring Unit, to be an independent decision-making authority, having a financial expert as director general. Numerous business restrictions have been imposed, including on business with anonymous customers. Offices working under the Act have been provided protection from civil or criminal liabilities, which may result in infringement of rights. Fundamental rights are being sacrificed at the altar of ‘accountability’.
The Islamabad Capital Territory Waqf Property Act, The Companies (Amendment) Act prohibiting the issuance of bearer shares or bearer share warrants, Limited Liability Partnership (Amendment) Act, makes Limited liability partnerships maintain particulars of beneficial owners, have all been passed to meet FATF requirements.
Pakistani and Hamas charities are under a scanner. The Senate Banking Committee appreciated tat Pakistan has created a Centre for Philanthropy. Yet no tangible action is visible in regard to charities based in Arab world including Saudi Arabia, UAE and other countries. The Saudi charities allegedly dole out money to anti-Iran entities.
Political considerations, not primary objectives, determine voting behaviour at FATF. Pakistan has not been able to speed up further enactments for a host of difficulties including opposition’s reservations. Pakistan needs 15 out of the FATF’s 39 members to exit the “grey list”.