Dawn – Pakistan may find itself on FATF blacklist after June

Anwar Iqbal

Washington DC-USA, 26 February 2018. Pakistan may find itself on the blacklist of a global financial watchdog if it does not prepare a comprehensive action plan to eradicate terrorist financing by June, official sources told Dawn.

The 37-nation Financial Action Task Force (FATF) held its plenary meeting in Paris last week where it placed Pakistan on a watchlist of the countries where terrorist outfits are still allowed to raise funds.

On Friday, the group issued an updated grey list, along with a statement announcing the decisions taken at the plenary session, and Pakistan was not on the list. Officials in Islamabad interpreted this as a “breather”, although it’s more of a technical detail.

The grey list identifies the “jurisdictions with strategic anti-money laundering/countering the financing of terrorism deficiencies for which they have developed an action plan with the FATF”.

Pakistan has not yet worked out the proposed plan with the FATF and that’s why it’s not on the list.

The FATF carries out an in-depth study of the financial system of a country, known as “mutual evaluation”, as part of the process to avoid blacklisting.

The next evaluation starts in April, which may take 18 months, and will be followed by another 12 months of analysis. A mutually agreed action plan for overcoming “strategic deficiencies” would become operative at the end of evaluation.

Between now and June, Pakistan will have to work out the details of the evaluation process with the FATF and a failure to do so could trigger another process, which may push Pakistan on the blacklist of wilful violators.

Usually, the FATF waits for a mutual evaluation report before starting the listing process but in Pakistan’s case, the group took an unprecedented step when it agreed to debate a US proposal, backed by Britain, France and Germany, to nominate Pakistan as a country having “strategic deficiencies” in “countering financing of terrorism”.

“The move was against the understanding given to Pakistan that Islamabad will be asked to work with the FATF on an action plan, before the listing process starts,” an official source told Dawn.

The Paris plenary held its first meeting on Pakistan on 20 February where China, Turkey and Saudi Arabia, which was representing the Gulf Cooperation Council (GCC) as it’s not a full member, opposed the move to place Pakistan on the watchlist. But the US pushed for an unprecedented second discussion on Pakistan, held on 22 February.

By then, Washington had convinced Riyadh to give up its support to Pakistan in return for a full FATF membership. This left only two, China and Turkey, in the Pakistan camp, one less than the required number of three members to stall a move.

At this stage, the Chinese informed Islamabad that they were opting out as they did not want to “lose face by supporting a move that’s doomed to fail”, another official source told Dawn.

“Pakistan appreciated the Chinese position and conveyed its gratitude to Turkey for continuing to support Islamabad against all odds,” the source added.

After the 20 February meeting, Foreign Minister Khawaja Asif sent out a celebratory tweet, saying that Pakistan had won a three-month reprieve.

Hours after the tweet, US State Department Spokesperson Heather Nauert indicated at a news briefing in Washington that Islamabad’s celebrations were premature. She said the Paris plenary was not over yet and it would hold another meeting on Pakistan on 22 February, as it did.

She also mentioned Hafiz Saeed and his activities while detailing US complaints against Pakistan and the sources that spoke to Dawn after the 22 February meeting said that indeed Hafiz Saeed and his “charities” were top on the list of the groups that the FATF wanted Pakistan to act against.

Pakistan did make some laws before the Paris meeting that would allow it to act against these groups but apparently that was not enough to convince the FATF.

Pakistan was first put on the FATF grey list in 2012 but was removed in 2015, after the FATF certified that Islamabad had done enough to counter terror financing.

Now, Pakistan will have to follow the same process that it did in 2015, starting with an action plan that Islamabad is required to submit in May.

If the FATF approves the action plan in June, it will make a formal announcement about placing Pakistan on the grey list. Should Islamabad fail to submit an action plan, or if the FATF does not accept it, the group can place Pakistan on its black list, along with North Korea and Iran.



Dawn – BRICS commit to ‘intensify cooperation’ against terror financing, money laundering

Staff Reporter

Karachi-Sindh-Pakistan, 6 September 2017. The BRICS countries, following the summit in Xiamen, have committed to intensifying their cooperation against terror financing and money laundering, within the framework established by the United Nations, specifically the Financial Action Task Force (FATF).

“We call for swift and effective implementation of relevant UNSC Resolutions and the FATF International Standards worldwide. We seek to intensify our cooperation in FATF and FATF-style regional bodies (FSRBs).

We recall the responsibility of all states to prevent financing of terrorist networks and terrorist actions from their territories.”

The “relevant UNSC resolutions” referred to in the statement includes UNSC 1267, which lists all those groups, entities and individuals that have been designated as terrorists by the United Nations Security Council. A large number of groups and individuals based in Pakistan, as well as the aliases used by them, are listed in that resolution.

The statement makes repeated mention of terror financing as an area of concern where the signatory countries will cooperate in the future. It calls for “blocking sources of financing terrorism” as well as to “tackle all sources, techniques and channels of terrorist financing.”

Pakistan has been struggling since 2015 to get a clean bill of health for its financial system following the removal of the country’s name from the so-called FATF “black list”, or list of countries whose financial system is vulnerable to being used for purposes of terror financing.

More recently, banks have found their foreign operations coming under increasing scrutiny by global regulatory authorities, as well as becoming the target of enforcement actions, due to vulnerabilities to terror financing.

“We have to be extremely careful,” says a senior source in the world of banking who has intimate familiarity with the matter. “It’s like a minefield out there. You have to be very careful as you navigate your country and your financial system through this”.

He adds that the requirements of the FATF are applicable to all countries, not only Pakistan, and the need to bring one’s financial system into compliance with global guidelines is becoming increasingly urgent because the costs of lack of compliance could well be rising, and are also being refracted through the prism of bilateral and regional relations that every country has with others.

Pakistan has struggled for more than a decade to come into proper compliance with FATF guidelines. A law against money laundering and terror financing has been passed, as well as strengthening the SECP to pursue cases of terror financing.

The State Bank has updated its guidelines for banks to detect and prevent terrorist funds and money laundering. But Pakistan’s track record of fully implementing UN Security Council Resolution 1267 remains under review by the FATF.


The Times of India – Fear of US sanctions, not of India, prompted Hafiz arrest

Indrani Bagchi

New Delhi, 1 February 2017. It wasn’t India’s coercive diplomacy or surgical strike, but the threat of international sanctions by the US under the Financial Action Task Force (FATF) that prompted action by Pakistan against Lashkar-e-Taiba (LeT) founder Hafiz Saeed.

Monday’s action may put Saeed out of sight for a few months, but there is no sign that his terror activities against India would be affected. FATF, an inter-governmental body, goes for effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats.

In early January, when the Obama administration was still in office, Pakistan’s ambassador in Washington Jalil Jilani was told by a senior US official that they would put Pakistan on the FATF’s blacklist if Islamabad did not take action against LeT and JuD, and their funding mechanisms.

JuD had come under the FATF’s scanner for its financial transactions. Pakistan could declare JuD a banned or “defunct” organisation, which means it could rebadge itself and function under another name.

The strictures did not only come from the US, these were raised at the meeting of the Asia-Pacific Group (APG) on money laundering, which is part of the FATF.

JuD, which is allowed to function without check in Pakistan despite coming under a ban by the United Nations Security Council’s 1267 committee, has grown beyond being just a terror group targeting India, although India remains its principal target. It is now working with the Haqqani network and other terror entities in Afghanistan and parts of West Asia.

Jilani reportedly forwarded the US message to Islamabad, Pakistan was given until January 31 to act against Saeed and JuD. This explains Saeed’s house arrest a day before the deadline.

The fact that Saeed was allowed to air a video reiterating his resolve to continue terror against India stands testimony to the fact that Pakistan does not want his arrest to be seen in the Indian context.

In fact, since January 14, Saeed has already been moving some of the India-targeted operations of JuD to a new organisation, Tehreek-e-Azaad-e-Kashmir.