The FATF Watch Dog and Pakistan

                           

The Underpinning of Pakistan by watchdogs:, irrespective of full filling 26 recommendations out of 27

            In the regime of the cold war, when the Soviet Union was on the verge of losing it. Then there was been an attempt to restore it by financing it illegally from outside its allies. And this created fear inside the mind of the US that the Soviet Union may rise again. The US and its allies meet and form a consensus to establish the authority which could counter “Money Laundering” by establishing a code of conduct on it and adhering to all the nations to it with the backing of the United Nations. Therefore in 1989 on the initiative of G7 an intergovernmental organization came into existence with the name Financial Action Taskforce (FATF). After the Soviet Union lost the war, it remains dysfunctional for some time. But in 2001, 9/11 invoke it and its domain got reached further dimensions related to “Terror Financing” as well.

                               If from any country, Terror financing or Money Laundering is being done, FATF warns the country and puts the country on “Grey List” and asks the country to work on 40 of its recommendations. And a country must oblige to do that because the FAFT has the support of the UN. If a country fails to do so. Then the country will be put on Black List and the UN as observers use its influence and compel every country to put sanctions on that particular country. The countries Like Iran and North Korea are facing such sanctions. And the FATF blacklist is now called the “call for action”. Was the common shorthand description for the FATF list of “Non- Cooperative Countries or Territories”.

                  Out of these recommendations, recommendation six requires each country to implement targeted financial sanctions to comply with the United Nations Security Council resolutions that require countries to freeze, without delay the funds or other assets and to ensure that no funds and other assets are made available to or for the benefit of (i) any person or entity designed by the UN Security Council under the chapter VII of the Charter of the UN, as required by the Security Council resolution 1267(1999) and its successor resolutions or (ii) any person or entity designated by that country pursuant to Security Council resolution 1373(2001).

                    In 2017 Lahore court ruled on the case of the barred chief of Jammat-ud-Dawa Hafiz Saeed. Had released him from all charges and encumbrances. And unfreeze his assets and all the charges against him were uplifted on the ground that international organizations have not proved conclusive evidence against him. And he can restore his activities as he will. Because of this controversial decision of the Lahore Court, FATF has put Pakistan on a grey list in 2018. And ask it to work on 27 recommendations given by FAFT with the coordination of APG and out of which 26 recommendations were fully filled by it. With the expertise and full capacity, Pakistan had worked on the recommendations as per the criteria laid down by the Watch Dog of FATF on money laundering and Terror Financing in Asia APG (Asia Pacific Group).

         But due to the unfortunate political conditions that arose between Pakistan and US. Pakistan is been unable to get out of the Grey List of FATF. Because the US wanted Pakistan to facilitate in the Afghanistan peace process within their terms and conditions. But Pakistan was unable to do so because it would compromise the National interests of Pakistan. However, the situation got more triggered when PM Imran Khan categorically denies giving any kind of bases to the US in order to counter terrorism by Quoting the Phrase “Absolutely Not”. It’s been analyzed that till Pakistan will not support the US, it will still remain on the Grey List of FATF.

 Now, what were the policy options for Pakistan?

(i)             Pakistan shall keep on going and work on a technical basis. It needs to strengthen its Financial Systems. State Bank of Pakistan, Federal Board of Revenue, and Securities Exchange Commission, to stop Money Laundering.

(ii)           Pakistan Shall sign MOU with the other countries where the Money Launder had been done from Pakistan and seek the investigation and seize the entity and persons and the assets involved in it.

(iii)         Most of all it needs international lobbying. Pakistan should pursue a bilateral foreign policy. And form a strong bond at the international level with other countries that will support Pakistan in FATF.

(iv)         To construct Geo-economic Foreign policy. To increase the interdependence with other countries to form a strong bond and acquire their support in FATF. Like Saudi Arabia, Turkey, Russia,
and Malaysia, etc.