A global money-laundering watchdog has placed Pakistan back on its terrorist financing watch list, Indian media and a diplomatic source said on Friday, in a likely blow to both Pakistan’s economy and its strained relations with the United States.
The move is part of a broader US strategy to pressure Pakistan to cut alleged links to militants waging chaos in neighbouring Afghanistan.
It comes days after reports that Pakistan had been given a three-month reprieve before being placed on the list, which could hamper banking and hurt foreign investment.
A non-Indian diplomatic source from one of the FATF countries confirmed that the group had decided Pakistan would be put back on the watchlist.
However, US and Indian officials had called the claim 'premature' and said a final decision was still to come, The Hindu reported.
Dr Faisal, spokesperson for the foreign office (FO), on Friday during a question and answer session said that, “Pakistan has serious concerns over and objections to the introduction of this new ‘nomination’ procedure which is unprecedented and in clear violation of established rules/practices of FATF.”
“Once things get clearer, we will be able to comment on Pak-US relations in this context,” said Faisal on the future of Pak-US relations.
He further added that all of US’ concerns had been addressed and resolved in 2015 when Pakistan was removed from the watch list. “In 2009 FATF identified “strategic deficiencies” in Pakistan’s Anti-Money Laundering(AML)/Combating the Finance of Terrorism (CFT) regime. To overcome these deficiencies, Pakistan agreed to implement FAFT’s Action Plan. As a consequence, the State Bank of Pakistan introduced a comprehensive set of new rules and guidelines on CFT/AML. Standalone legislation on Money Laundering was also enacted by the Parliament to deal with AML issues,” Faisal added.
“In June 2015, after strenuous efforts, the implementation of this Action Plan was completed and Pakistan was de-listed from FATF’s grey list. This exit was an acknowledgment of the robustness of Pakistan’s CFT/AML regime and well in line with international standards,” he said to the media.
Interior Minister Ahsan Iqbal also took to Twitter on Friday, urging against speculation on the sensitive matter until there was official confirmation of the FATF decision.
"It was a general comment," he added.
No official intimation of #FATF decision yet. We should not speculate till official statement is released.— Ahsan Iqbal (@betterpakistan) February 23, 2018
It was general comment— Ahsan Iqbal (@betterpakistan) February 23, 2018
Earlier in the week China, Turkey, and the Gulf Cooperation Council (GCC) were opposing the US-led move against Pakistan but by Thursday night both China and the GCC dropped their opposition, the diplomatic source said.
Iqbal sought to thank Turkey for its unwavering support "against all odds".
Thank you Turkey for standing with Pakistan against all odds & proving that we are one. We are proud to have a brother like you.— Ahsan Iqbal (@betterpakistan) February 23, 2018
“The decision was taken yesterday,” the diplomat said.
He added that the financial consequences would not kick in until June, which, in theory, could allow Pakistan the wriggle room to fix the terrorist financing issues. “But the odds of that, particularly in an election year, seem slim,” he added.
Washington has spent the past week lobbying member countries of the Financial Action Task Force (FATF) to place Pakistan on the so-called “grey list” of nations that are not doing enough to combat terrorism financing.
Pakistan’s last-minute efforts to avoid being placed on the list, which included taking over bodies linked to a powerful figure, proved insufficient, India’s Republic news service and Times Now television channel said.
An official statement was expected later on Friday.
Pakistan was previously on the list for three years until 2015.
Pakistani officials and analysts fear being on the FATF watchlist could endanger its handful of remaining banking links to the outside world, causing real financial pain to the economy just as a general election looms in the summer.
Under FATF rules one country’s opposition is not enough to prevent a motion from being successful. Britain, France and Germany backed the US move.
Islamabad has sought to head off the move by amending its anti-terrorism laws and by taking over organisations controlled by Hafiz Saeed whom Washington blames for the 2008 Mumbai attacks that killed 166 people.
On Tuesday, Foreign Minister Khawaja Asif tweeted that Pakistan had received a 3-month reprieve, adding that it was “grateful to friends who helped”.