FATF Chal­lenge

Be­ing on the FATF grey list is pos­ing fur­ther prob­lems to Pak­istan’s eco­nomic fu­ture.

Enterprise - - Contents - By Zee­shan Haider

The Fi­nan­cial Ac­tion Task Force (FATF) has of­fi­cially put Pak­istan on its ‘grey list’ with a hope that it would en­force its plan to tighten its anti-terror fi­nanc­ing laws in com­ing months to get off the list. The coun­try runs the risk of land­ing in the FATF’s black­list if fails to en­force the plan of ac­tion.

Ac­cord­ing to the FATF, the Pak­istani del­e­ga­tion at the Paris meet­ing made a “high level po­lit­i­cal com­mit­ment” to strengthen its anti-money laun­der­ing and anti-terror fi­nanc­ing laws and to ad­dress its strate­gic counter ter­ror­ist fi­nanc­ing-re­lated de­fi­cien­cies.

The task force has listed out eight ob­jec­tives for Is­lam­abad to achieve through its strong anti-terror fi­nanc­ing and anti-money laun­der­ing laws in the stip­u­lated time.

The move does not en­tail any im­me­di­ate fi­nan­cial im­pli­ca­tion for the coun­try but it does hurt the in­ter­na­tional im­age of the coun­try.

Though Pak­istan has been on the grey list for a long pe­riod ear­lier, in view of the cur­rent pre­car­i­ous eco­nomic sit­u­a­tion of the coun­try, the FATF de­ci­sion could be prob­lem­atic for deal­ings with the in­ter­na­tional fi­nan­cial in­sti­tu­tions as well as with the in­ter­na­tional bank­ing sys­tem.

Though un­prece­dented US pres­sure, on In­dia’s prod­ding, is de­scribed as the main rea­son be­hind the of­fi­cial plac­ing of Pak­istan on the grey list, the move has emerged as the first chal­lenge for the govern­ment to be elected af­ter July 25 vote on the diplo­matic front to get Pak­istan off this list as soon as pos­si­ble.

The de­ci­sion came at a bad time when Pak­istan is weigh­ing the op­tion to go to the In­ter­na­tional Mon­e­tary Fund (IMF) to seek a bailout pack­age for avert­ing a pos­si­ble bal­ance of pay­ment cri­sis.

There are fears that Pak­istan could face a daunt­ing task to get the IMF pack­age on some favourable terms in view of the dom­i­nant role of the United States at the global fi­nan­cial in­sti­tu­tion.

With the coun­try’s for­eign ex­change re­serves hov­er­ing around ten bil­lion dol­lars – hardly enough for the pay­ment of im­ports for a month and so – and with huge pay­ments due in com­ing months for for­eign loans, the govern­ment has very lim­ited op­tions to deal with the sit­u­a­tion.

The pre­vi­ous govern­ment made some ar­range­ments from China which de­ferred the cri­sis for a while, but the is­sue could not be ad­dressed through such stop­gap ar­range­ments any longer.

It has be­come im­per­a­tive for the Pak­istani lead­er­ship, both po­lit­i­cal and

mil­i­tary, to sit to­gether and carve out a plan of ac­tion to ad­dress this chal­lenge to the sat­is­fac­tion of the in­ter­na­tional com­mu­nity with­out com­pro­mis­ing na­tional se­cu­rity.

It would be wrong to say that Pak­istan has done noth­ing to curb terror fi­nanc­ing and money laun­der­ing that is used to fi­nance terror ac­tiv­i­ties.

Since be­com­ing an ally of the United States in its war against terror fol­low­ing 9/11, Pak­istan took a num­ber of steps to crack­down on trans­fer of money through Hawala and Hundi – the ma­jor sources of fund­ing for the ter­ror­ists.

In May, the Se­cu­ri­ties and Ex­change Com­mis­sion of Pak­istan is­sued Anti-Money Laun­der­ing and Counter Fi­nanc­ing of Ter­ror­ism Reg­u­la­tions in line with the FATF rec­om­men­da­tions.

The new reg­u­la­tions, su­per­sed­ing all pre­vi­ous laws, club to­gether all anti-money laun­der­ing and anti-terror fi­nanc­ing laws.

Crim­i­nals of­ten set up com­pa­nies and firms in the name of fake peo­ple or in the name of other per­sons and then use these firms for money laun­der­ing and terror fi­nanc­ing, all the while show­ing them as nor­mal busi­ness trans­ac­tions.

But un­der the new SECP reg­u­la­tions, the fi­nan­cial in­sti­tu­tions are re­quired to iden­tify the ul­ti­mate ben­e­fi­cial own­ers as well as all le­gal per­sons and ar­range­ments re­lated to com­pa­nies and firms, so now the crim­i­nals can­not hide their iden­tity.

Ear­lier this year, the State Bank of Pak­istan also in­structed all for­eign ex­change com­pa­nies to firmly com­ply with the anti-money laun­der­ing reg­u­la­tions to avoid any puni­tive ac­tion.

Pre­vi­ously, the cen­tral bank had can­celled li­censes of many for­eign ex­change com­pa­nies found neg­li­gent in com­ply­ing with the anti-money laun­der­ing laws.

While the FATF’s lat­est ac­tion might be po­lit­i­cally-mo­ti­vated given the arm-twist­ing tac­tics used by the United States in in­ter­na­tional af­fairs since Don­ald Trump be­came pres­i­dent, we need con­tin­u­ous in­tro­spec­tion for the sake of our own in­ter­ests to keep our house in or­der.

When per­son­al­i­ties linked to groups which we have put on terror lists roam freely around the coun­try, prop­a­gat­ing their agenda, then it does raise con­cern and fear not just in­side the coun­try, but it does raise eye-brows in the out­side world too.

Coin­ci­dently, the FATF de­ci­sion came just close to the con­tro­ver­sial lift­ing of travel and fi­nan­cial re­stric­tions on Maulana Ahmed Lud­hi­anvi, the leader of the de­funct Ahle Sun­nat Wal Ja­maat (ASWJ).

Such con­tro­ver­sial moves over­shadow the well-mean­ing ef­forts to curb mil­i­tant ac­tiv­i­ties and give an ex­cuse to In­dia as well as other coun­tries to ma­lign our com­mit­ment to com­bat ter­ror­ism.

The Pak­istani na­tion as well as its valiant se­cu­rity forces, have un­doubt­edly given nu­mer­ous sac­ri­fices in their fight against ter­ror­ism and the world needs to recog­nise these sac­ri­fices as they also played a ma­jor role in mak­ing the world safer.

Af­ter FATF place­ment of Pak­istan on the grey list, the Chi­nese govern­ment has very right­fully urged the in­ter­na­tional com­mu­nity to fully recog­nise and trust Pak­istan’s great ef­forts and sac­ri­fices in the fight against ter­ror­ism.

“I would like to re­it­er­ate that the in­ter­na­tional com­mu­nity should treat Pak­istan’s ef­forts ob­jec­tively and fairly, and give more recog­ni­tion and sup­port to the Pak­istani side for more real and ef­fec­tive in­ter­na­tional counter-ter­ror­ism co­op­er­a­tion,” says Chi­nese For­eign Min­istry spokesman Lu Kang.

The next govern­ment needs to launch a ro­bust diplo­matic ef­fort to en­list sup­port from other in­flu­en­tial coun­tries and blocs like Rus­sia and Euro­pean Union for its en­deav­ours to com­bat ter­ror­ism and at the same time should not let its achieve­ments at this front go waste at home.

Pak­istan will have to tread a tightrope in the com­ing months to meet the dual chal­lenges at the diplo­matic and eco­nomic fronts.

While it has to ac­tively en­gage the world com­mu­nity to ad­dress its eco­nomic woes, it has to re­move in­ter­na­tional con­cerns re­lated to ter­ror­ism with­out com­pro­mis­ing its vi­tal se­cu­rity and na­tional in­ter­ests.

With elec­tions just around the cor­ner, the po­lit­i­cal lead­ers of the coun­try in­stead of re­ly­ing on pop­ulist slo­gans and rhetoric need to rise to the oc­ca­sion and give a se­ri­ous thought to the real chal­lenges faced by the coun­try.

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