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FATF, Pakistan and Bankruptcy of Counter Terrorism

October 18, 2019 By Lt. General P.C. Katoch (Retd) Photo(s): By FATF
The Author is Former Director General of Information Systems and A Special Forces Veteran, Indian Army


Pakistan has taken modest steps to meet FATF requirements

In early September this year, a 15-member Pakistani delegation led by the Hammad Azhar, Minister for Economic Affairs Division met with the Asia Pacific Group (APG), regional body of the Financial Action Task Force (FATF), examining Pakistan's performance on key issues related to terror financing and money laundering at a two-day preliminary meeting in Bangkok. Michael Kugelman, deputy director of South Asia Program at the Washington-based Woodrow Wilson Center, said, "Since no major decisions are made until October, Islamabad must know that no matter what happened in Bangkok, it's not out of the woods yet. "It's hard to know what transpired in Bangkok, or whether it helped or hindered Pakistan's prospects for getting relief at the important Paris meeting in October." Post the APG meeting, Hammad Azhar said, "The Pakistan delegation effectively presented Pakistan's progress on each of the FATF action plan items and provided additional information/clarification to the APG-Joint Group." Nadeem ul Haque, a former senior resident representative of the International Monetary Fund (IMF) charged that Pakistan may have fulfilled other conditions imposed on the country by FATF, but the country has yet to really counter what he called "visible terrorists". James Schwemlein of Carnegie Endowment for International Peace said, "So far, it appears the authorities (Pakistan's) have taken modest steps to meet FATF requirements, such as freezing banking accounts and seizing properties, but are far from full compliance. At this point, it does not appear that Pakistan has taken any irreversible step to improve its anti-money laundering and counter terror-financing regime." Schwemlein also said Pakistan's intelligence agency continues to maintain ties with militant groups. So the smart move that Pakistan did on October 10, just before the Paris meeting of FATF scheduled in October, was to arrest four leaders of the banned Lashkar-e-Taiba (LeT) /Jamaat-ud-Dawah (JuD) on charges of terrorism financing; identified as Zafar Iqbal, Yahya Aziz, Muhammad Ashraf and Abdul Salam.

This action prompted the spokesman of Pakistan's Counter Terrorism Department (CTD) terming it an "important progress" in the National Action Plan (NAP) as the main leaders of proscribed organisation JuD/LeT have been arrested by the CTD Punjab in offences of terrorism financing, and adding, "JuD/LeT chief Hafiz Saeed is already in prison facing trial for commission of offences of terrorism financing. Now the entire core leadership of the JuD/LeT will be on trial."

Pakistan was placed on the 'grey list' of FATF in June 2018 and was given a plan of action to complete it by October 2019, or face the risk of being placed on the black list with Iran and North Korea. The FATF needed to take into account following factors:

  1. The sincerity of Pakistan remains highly questionable which is indicative from taking these four terror financiers just one day before the plenary meeting of FATF in Paris;
  2. Pakistan's game of taking terrorist leaders and supports/financiers into custody, giving them bail, trial by kangaroo courts and absolving them of charges eventually is well established, and;
  3. Even in custody, such individuals are accorded red carpet under ISI's tutelage and are free to meet anyone and continue their terror activities.

Hafiz Saeed, arrested on the same charges, has been on judicial remand since July but his arrest too came just ahead of a visit Imran Khan, Pakistan's prime minister's visit to Washington to meet US President Donald Trump – hogwash to fool America. Saeed, designated terrorist by the US and the United Nations, is blamed by the United States and India for the Mumbai attacks, which killed more than 160 people.

The US had offered a $10 million reward for information leading to Saeed's conviction. So why arrest him only now? On October 14, Alice Wells, head of the US state department's South and Central Asian bureau said, "As Prime Minister Imran Khan has said, Pakistan, for its own future, must prevent militant groups from operating on its soil. We welcome news that Pakistan arrested four LeT leaders. The victims of LeT's vicious attacks deserve to see these individuals prosecuted now, along with LeT leader Hafiz Saeed." But the US knows, as does the rest of the world, that Pakistan has a long history of catching and releasing terrorists operating from its soil. Speculation was rife before and during the Paris meeting of FATF (October 13-18) that Pakistan could be placed on the black list or even 'dark grey' list, latter term hitherto unknown and never applied to North Korea and Iran. Some skeptics were also of the view that Pakistan may be able to hoodwink FATF completely and be removed from the grey list altogether. But then news emerged that the FATF has decided, in principle, to keep Pakistan in its Grey List till February 2020, directing Islamabad to take extra measures for complete elimination of terror financing and money laundering.

Pakistan's media reports that the FATF reviewed the measures that Pakistan has already taken to control money laundering and terror financing, has urged Pakistan to take extra measures for complete elimination of terror financing, and that FATF will take a final decision on Pakistan's position in February 2020. A formal announcement by FATF on October 18 would confirm this verdict. But how did Pakistan avoid getting blacklisted, even as India had recommended blacklisting of Pakistan citing Islamabad permitting Hafiz Saeed to withdraw funds from his frozen accounts, while concerns were also raised on the tax amnesty scheme offered in Pakistan? As elaborated in media, support of at least three countries is required to not blacklist any country. So naturally, China, Turkey and Malaysia "appreciated" steps taken by Pakistan to curb terrorism. With such stipulation for blacklisting a country, what good was the FATF meeting attended by representatives from 205 countries, the IMF, the UN, the World Bank and other organisations? Indian media may gloat that despite Imran Khan's best efforts, Pakistan would continue to remain on FATF grey list but this actually is bankruptcy of countering terrorism at the international level. Will it not be easy for Pakistan to muster three nations to defend it from being blacklisted in future also?