Pakistan fares poorly on countering terror funding

Fully compliant with only one of 40 recommendations

NEWDELHI: Days ahead of a meeting of the Financial Action Task Force (FATF) that will consider whether to blacklist Pakistan, an official report has found the country is fully compliant with only one of 40 recommendations made by the global watchdog to counter terror financing and money laundering.

The report will be among materials to be considered by the FATF’s plenary and working group meetings in Paris from October 13 to 18. The multilateral body is expected to decide whether to retain Pakistan in the watchdog’s “grey list” or downgrade its status to the “black list”, which could entail extensive economic sanctions and impact a $6-billion bailout programme with the IMF.

Pakistan was placed on the grey list last year, and a string of assessments by FATF and the Asia Pacific Group (APG), a regional body that monitors compliance with the watchdog’s terror financing standards, have found that the country has failed to deliver on most components of a 27-point action plan.

The new “mutual evaluation report” by APG states Pakistan should make “fundamental improvements” in investigating and prosecuting cases related to raising and use of funds by groups such as Lashkar-e-Taiba (LeT), Jaish-e-Mohammed (JeM), Jamaat-ud-Dawah (JuD), Falah-e-Insaniyat Foundation (FIF), al-Qaeda, Islamic State, Taliban, and Haqqani Network.

In its list of “priority actions” to be taken, the report states: “Pakistan should adequately identify, assess and understand its ML/TF (money laundering/ terror financing) risks including transnational risks and risks associated with terrorist groups operating in Pakistan such as Da’esh, AQ, JuD, FiF, LeT, JeM, HQN, and this should be used to implement a comprehensive and coordinated risk-based approach to combating ML and TF.”

Of 40 technical recommendations made by FATF to counter money laundering and terror financing, the report showed Pakistan was “fully compliant” only with a recommendation for secrecy laws for financial institutions, non-compliant on four, partially compliant on 26, and largely compliant on nine.

The report also gave Pakistan a “low” rating for effectiveness and technical compliance on 10 key issues, including investigation and prosecution of terror financing, preventive measures, financial sanctions, policy and coordination, and financial intelligence. The only exception was a “moderate” ranking for international cooperation.

The report said Pakistan had not taken “sufficient measures” to implement obligations under the UN’s 1267 Sanctions Committee against listed individuals and entities, “especially those associated with Lashkar-eTayyiba (LeT)/Jamaat-ud-Dawa (JuD), and Falah-i-Insaniat Foundation (FIF) as well as the groups’ leader Hafiz Saeed”.

Though authorities had taken control of some properties of JuD and FIF, Pakistan didn’t demonstrate that it had “established effective asset management of this frozen property” and could not provide information about the prosecution of individuals associated with the property and “continued freezing actions against JuD, FIF and other regional terrorist networks”.

Contrary to Pakistan’s own assessment that terror financing poses a “medium” risk, the report concluded the country faces a “significant TF threat” and that the 228 registered cases and conviction of 58 people during 2015-18 “is not consistent

with Pakistan’s overall level of TF risk”. It further concluded funds confiscated from terrorists – a total of 107,111 during 2015-18 – was “not commensurate” with the terror financing risk profile.

The report said the confiscated amount is “perceived as low in the context of Pakistan considering the high number of terrorist organisations operating within and at close proximity to the country”.

The report indicted Pakistan’s various anti-terror organisations and law enforcement agencies for failing to coordinate in taking action against terror groups. It stated that provincial counterterror departments have prosecuted all the terror financing cases while the Federal Investigation Agency (FIA), the body probing the Mumbai attacks, has not prosecuted any cases.

The report also backed India’s longstanding allegation that groups sanctioned by the UN’s 1267 Sanctions Committee, such as LeT and JeM, are still raising funds with impunity.

“Several UN-listed organisations continue to operate openly in Pakistan, including holding fundraising events. Despite some positive recent actions taken by Pakistan since February 2018, it is clear that UNSCR 1267 is not being fully implemented,” it stated. The “continuing problems with domestic funding of terror groups and emerging TF risks from transnational terror groups is a continuing significant concern”, it added.

The report recommended that Pakistan “should enhance its understanding of the TF risks posed by Da’esh, AQ, JuD, FiF, LeT, JeM, HQN, and persons affiliated with the Taliban”, and improve its action plan.

Pakistan on Monday rejected recent remarks by India’s defence minister Rajnath Singh that the “FATF can any time blacklist Pakistan”, describing it as an attempt to “politicise” the multilateral watchdog. The Foreign Office said the remarks “reinforces Pakistan’s concerns, repeatedly highlighted to the FATF membership, about India’s attempts to politicise the FATF proceedings to further its narrow, partisan objectives”.

The Foreign Office said in a statement that India’s “blatant partisanship” called into question “its credentials to be co-chair of the Asia-Pacific Joint Group that reviews Pakistan’s progress to implement the FATF action plan”.

It called on the broader FATF membership to reject any attempt at politicising FATF proceedings and to ensure the process remains fair and unbiased.

Former ambassador Rajiv Dogra, who served in Pakistan, said it would be surprising if the country is put in the FATF’s “black list” despite the damning report by the APG. He noted that Pakistan’s close ally China is the current president of the FATF and recent actions by Islamabad — such as hosting talks between the Taliban and a US special representative — were aimed at getting it back in America’s good books.

“Pakistan has seen to it that the elections in Afghanistan too went off relatively peacefully and the US and Pakistan are cosying up again. It will be enough if Pakistan continues to stay in the grey list. I would be very surprised if it is put in the black list,” he said.