Good news from Paris
We are already on the path to address the enforcement issue.
PHOTO: FATF
The Financial Action Task Force (FATF) meeting in Paris, last week, had three explicit or implicit takeaways for Pakistan. Firstly, Pakistan’s considerable progress during the last few months is well acknowledged. Secondly, the threat of Pakistan being blacklisted is over. The Indian-dominated narrative of Pakistan being on the verge of blacklisting is now replaced with how soon Pakistan can get out of the grey list. And thirdly but most importantly, Pakistan should not lose momentum and instead tie the loose ends and push the pedal on enforcement.
From the surface, the FATF’s most recent statement on Pakistan was hardly any different from the last one. But, when looked at closely, it carried good news carefully wrapped in diplomatic jargon. In October 2019, the FATF expressed “serious concerns with the lack of overall progress by Pakistan”, which this time was diluted to mere “concerns on not completing the action plan in the agreed timeline”. Moreover, the recent statement did acknowledge “notable improvements” by the country. This change in tone was confirmed by the grapevine coming out of Paris on member countries acknowledging significant progress made by Pakistan and was further validated by the Chinese Ministry of Foreign Affairs in its statement appreciating Pakistan’s enormous efforts to improve its CTF (counter terrorism-financing) regime.
It remains a fact that Pakistan initially did not take the FATF action plan seriously. One reason could be that Pakistan had been on the grey list earlier and still managed to get out on the back of cosmetic legal and institutional changes. But those were different times. It seems that this time around, the global community had much lesser patience. Pakistan’s stand-off with India in the wake of the Pulwama attack last year, leading to the two nuclear South Asian rivals coming to the brink of war, was too serious a threat for the world to ignore.
However, the decisionmakers in Pakistan have not been blind to this change in the global mood. Recent months witnessed a significant shift in Pakistan’s attitude towards the FATF action plan, which is now jointly driven by the civil and military leadership. Within a period of merely four months, Pakistan is now largely compliant on 14 out of 27 points as compared to only five in October 2019. A number of steps were taken including: entrusting the FBR with regulation of real estate agents and jewellers; enacting new laws; ensuring that the Central Directorate of National Savings and Pakistan Post are compliant with FATF’s anti-money laundering and combating the financing of terrorism (AML/CFT) regime; tightening the noose around charity organisations; enabling effective and swift sanctions against designated individuals and organisations; and registering scores of terrorism finance cases leading to high-profile convictions.
But it’s too early to declare a victory. The FATF statement specifically mentioned eight areas where the government needs to demonstrate results by June. All these areas are essentially about enforcement: cracking down on still-open channels of money laundering; taking the terrorism finance cases to their logical end through convictions and sanctions; and shutting down the oxygen pipeline to terrorist organisations. Basically, we need to provide the comfort to the world that our AML/CFT systems are in fact delivering and making an impact on ground.
We are already on the path to address the enforcement issue. The recent conviction of Hafiz Saeed was a testament to the government’s commitment to the FATF action plan with no holds barred. The important thing is not to lose sight and understand that Pakistan needs to fully comply with all 27 points in the action plan, before it can be taken off the grey list. Simply speaking, if we keep on doing what we have been doing in the last four months, there’ll be no stopping Pakistan from exiting the grey list later this year.
Published in The Express Tribune, February 25th, 2020.
From the surface, the FATF’s most recent statement on Pakistan was hardly any different from the last one. But, when looked at closely, it carried good news carefully wrapped in diplomatic jargon. In October 2019, the FATF expressed “serious concerns with the lack of overall progress by Pakistan”, which this time was diluted to mere “concerns on not completing the action plan in the agreed timeline”. Moreover, the recent statement did acknowledge “notable improvements” by the country. This change in tone was confirmed by the grapevine coming out of Paris on member countries acknowledging significant progress made by Pakistan and was further validated by the Chinese Ministry of Foreign Affairs in its statement appreciating Pakistan’s enormous efforts to improve its CTF (counter terrorism-financing) regime.
It remains a fact that Pakistan initially did not take the FATF action plan seriously. One reason could be that Pakistan had been on the grey list earlier and still managed to get out on the back of cosmetic legal and institutional changes. But those were different times. It seems that this time around, the global community had much lesser patience. Pakistan’s stand-off with India in the wake of the Pulwama attack last year, leading to the two nuclear South Asian rivals coming to the brink of war, was too serious a threat for the world to ignore.
However, the decisionmakers in Pakistan have not been blind to this change in the global mood. Recent months witnessed a significant shift in Pakistan’s attitude towards the FATF action plan, which is now jointly driven by the civil and military leadership. Within a period of merely four months, Pakistan is now largely compliant on 14 out of 27 points as compared to only five in October 2019. A number of steps were taken including: entrusting the FBR with regulation of real estate agents and jewellers; enacting new laws; ensuring that the Central Directorate of National Savings and Pakistan Post are compliant with FATF’s anti-money laundering and combating the financing of terrorism (AML/CFT) regime; tightening the noose around charity organisations; enabling effective and swift sanctions against designated individuals and organisations; and registering scores of terrorism finance cases leading to high-profile convictions.
But it’s too early to declare a victory. The FATF statement specifically mentioned eight areas where the government needs to demonstrate results by June. All these areas are essentially about enforcement: cracking down on still-open channels of money laundering; taking the terrorism finance cases to their logical end through convictions and sanctions; and shutting down the oxygen pipeline to terrorist organisations. Basically, we need to provide the comfort to the world that our AML/CFT systems are in fact delivering and making an impact on ground.
We are already on the path to address the enforcement issue. The recent conviction of Hafiz Saeed was a testament to the government’s commitment to the FATF action plan with no holds barred. The important thing is not to lose sight and understand that Pakistan needs to fully comply with all 27 points in the action plan, before it can be taken off the grey list. Simply speaking, if we keep on doing what we have been doing in the last four months, there’ll be no stopping Pakistan from exiting the grey list later this year.
Published in The Express Tribune, February 25th, 2020.