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Pakistan's FATF Noose

July 6, 2019 By Lt. General P.C. Katoch (Retd)
The Author is Former Director General of Information Systems and A Special Forces Veteran, Indian Army


The last Financial Action Task Force (FATF) plenary session was held in Orlando, US, on June 21. 2019. A stern statement at the end of its outcome document warned Pakistan that it could face a blacklisting in FATF's next session scheduled in coming October, if it did not follow a 27-point checklist on bringing stricter laws to curb the access of funds to terror groups inside the country, including IS, Al-Qaeda, Lashkar-e-Taiba (LeT) and Jaish-e-Mohammad (JeM). The FATF put off blacklisting Pakistan during the June plenary session despite Pakistan failing in 25 out of the 27-point checklists of FATF, but stressed that Pakistan had missed two action plan deadlines already. Reminding Pakistan that it had less than three months to show progress on curbing terror financing, India said it expected the Pakistani government to fully comply with the action plan set out by global body Financial Action Task Force (FATF) by September this year.

The MEA spokesperson said on June 22 that India expected Pakistan "to take all necessary steps to effectively implement the FATF Action Plan fully within the remaining time frame, that is, by September 2019, in accordance with its political commitment to the FATF and take credible, verifiable, irreversible and sustainable measures to address global concerns related to terrorism and terrorist financing emanating from any territory under its control."

Pakistan pointed out that the FATF had acknowledged some steps had been taken by Pakistan's government. In the past few months, the Imran Khan government had changed laws and shut down several outfits run by the terror groups mentioned. However, FATF members are concerned that there are no cases registered against the terror leadership, namely Saeed and Masood and other UN-designated terrorists. This particular issue had also been stressed by the US, UK, Germany and France, supported by India, during FATF meet in February at Paris and at Guangzhou in May this year, Significantly, Pakistan's anti-terror law continues to remain out of sync with FATF standards and also the latest UN resolution 2462, which calls for criminalising terrorist financing.

The Pakistani military is firmly in charge of Pakistan with Imran as titular head. Under the military, Pakistan has not taken concrete steps to curb terrorism beyond cosmetics. Pakistan backed terrorist attacks in the Kashmir Valley have not ceased notwithstanding fake Pakistani claims of intelligence sharing. Whether Pakistan will be put on FATF's 'black' list in the next review in October this year or will continue to remain on its 'grey' list is an open ended question because US stance towards Pakistan cannot be predicted, given the fact what President Donald Trump will tweet or decide next is not known even to the US administration.

The Asian Development Bank has denied Pakistani claims it has sanctioned $3.4 billion loan to Pakistan, but the $6 billion IMF bailout package to Pakistan, albeit over a three-year period, would not have been possible without the concurrence of the US. Can Pakistan double-time the Trump Administration in the make-believe that it is serious in bringing Taliban in the Afghan reconciliation process, same way it fooled the Obama Administration? It will depend on how the CIA-ISI links pan out in convincing Trump in backdrop of the US need to minimise own casualties in Afghanistan and make an exit. An important factor will also be if the US physically wants to engage Iran in conflict, like Iraq and Syria. With US presidential elections slated for November 3, 2020, Trump having made intentions public he will seek a second term and tankers being targeted in the gulf, possibility of conflict in Iran have increased with Iran already having exceeded the limit of Uranium production permitted under the 2015 Iran Nuclear Deal - the JCPOA. But all said and done, the tidings don't bode well for the public of Pakistan. Pakistan's effort would be to continue on 'grey' list of the FATF beyond October 2019, the handle for which is undoubtedly with the US.

Interestingly, despite threatening Turkey under CAATSA sanctions for importing the Russian S-400 Triumf SAM systems, Trump has suddenly come up with a tweet that Turkey was "wrongly" targeted on this issue. Recently on a visit to South Korea, Trump made an impromptu visit to Panmunjom on the demilitarised zone to meet North Korean President Kim Jong-un. The speculation is that despite all the threats, sanctions and cajoling, Trump may have to settle for freezing North Korea's existing nuclear capability instead of his aim of de-nuclearising the Korean Peninsula. Pakistani PM Imran Khan is scheduled to make a 10-day visit to the US this month - July 2019. His itinerary is not known; whether he would meet Trump or not. But given the unpredictability of Trump, whether Pakistan will be placed on blacklist of the FATF is October remains an open-ended question. One thing is certain, given the time left till end September and little indications in Pakistan to curb terror, there is no way Pakistan can fully adhere to the 27-point checklist of the FATF.