A self-inflicted wound

By Thursday morning Pakistan was on the Financial Action Task Force grey list following a plenary meeting in Paris

The decision came late on Wednesday night and by Thursday morning and Pakistan was on the Financial Action Task Force(FATF) grey list following a plenary meeting in Paris. The FATF cannot itself impose sanctions it does not have that power, but countries affiliated with it can and therein lies the danger. The FATF has decided that Pakistan has failed to curb the financing of terrorist groups that operate on its soil, and the pleas of our delegation to the contrary fell on ears that were not deaf but disbelieving. Simply put the members of the FATF who have their own sources of information do not trust Pakistan to be truthful with them. This is not some arcane Indian or American plot this is what a large number of nations around the world believe to be the case.

The ramifications of this decision are going to take some time to play out, and the chances of it being reversed short of some stringent verification are vanishingly small. It is not that Pakistan has done nothing as acknowledged by the FATF itself in 2015, it is more that it is not demonstrating a consistent ‘self-starting’ capacity aside any pressure that may be brought by institutions such as the FATF. It is this laggardly approach to some aspects of the FATF ‘to-do’ list that fuels the mistrust. This is particularly true of the limitations or otherwise placed on banned and proscribed organisations many of which still operate with impunity and the apparent complaisance of the state. There are few if any complaints about the formal banking sector which is robust and well regulated, but the informal channels by which money is transferred are another matter entirely. Although difficult to interdict they are not impervious to surveillance.

There is going to be no immediate effect on the economy but the optics are all negative. If Pakistan fails to satisfy the FATF mutual evaluation then it will be placed on the blacklist, a far more serious outcome that will reach beyond mere embarrassment. This bullet could have been dodged by timely intervention. It was not. The next bullet is going to be deadlier.

Published in The Express Tribune, June 29^th, 2018.

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