The shade of grey: On FATF's mandated tasks

The shade of grey: On FATF's mandated tasks

Context

The decision by the Paris-based watchdog, the Financial Action Task Force, last week to retain Pakistan on its greylist has clearly disappointed the Imran Khan government.
His cabinet had projected confidence that the country would be taken off the greylist — monitored jurisdictions on terror financing and money laundering activities — having been cleared on 21 of the 27 mandated action points.

Impacts on Pakistan:

Pakistan will now face international strictures on its markets and on its ability to procure loans until the next FATF plenary in February 2021, by which time it is expected to complete the six pending issues.
A bigger problem for Islamabad was that Turkey was the only other country in the 39-member FATF to push for Pakistan to be let off, by making a suggestion that the last six points be cleared by an “on-site” visit by an FATF team.
The proposal was dropped when even other traditional backers of Pakistan such as China, Saudi Arabia and Malaysia did not support it.

Actions to be taken by Pakistan:

Clearly, Pakistan has little option but to complete its tasks in the next four months, which include:
- More action against UNSC-banned terrorists and terror groups,
- Action against charitable organisations (Non-Profits) linked to these banned entities,
- Tracing fugitive terrorists and pursuing convictions against them,
- Revising the list of banned entities under the Anti-Terrorism Act to reflect all those banned by the UNSC, and
- Cracking down on other channels of terror financing through narcotics and smuggling.
For those in New Delhi watching the outcome of the FATF decision, there are some broader dividends to consider from this process.
To begin with, the fact that the FATF has retained Pakistan on the greylist for the third time this year, and not automatically downgraded it to the blacklist (with Iran and North Korea) when its deadline for action ended in September 2019, has ensured the pressure has continued to make Pakistan accountable on terror.

Way forward:

The Khan government has been forced to make a real legislative push to bring Pakistani anti-terror laws in line with international standards, while, at least for the interim, also ensuring sufficient pressure on groups such as the LeT and the JeM that target India, to refrain from public comments and publicly raising funds.
Meanwhile, Pakistan’s support to the U.S.-led Afghan process and talks with the Taliban are crucial to the peace process, and the FATF process has made Islamabad more amenable to helping Afghanistan.
It is hoped that the prolonged FATF process will enable this realisation in Islamabad.