In a recent FATF meet to decide Pakistan’s fate, the FATF decided to keep Pakistan on the Greylist. However, if Pakistan is not added back to the whitelist until April 2020, it will by default end up in the Blacklist.
Crux of the Matter
What is FATF Blacklisting? Financial Action Task Force (FATF) is an inter-governmental body that sets legal, operational, and regulatory, standards and norms to combat terror financing, money laundering, and other associated threats to maintain the integrity of the global financial system. Established in 1989 by G7 members and few other member nations, FATF provides policy suggestions for fighting the crimes mentioned above and the proliferation of mass-destruction weapons. Countries that do not adhere to the standards and norms set by FATF are issued sanctions and are put on Blacklist. Blacklist includes countries that do not comply with the set norms and support money laundering activities, terror financing and other such activities. These countries are called Non-Cooperative Countries or Territories (NCCTs). Currently, North Korea and Iran are on FATF Blacklist. Greylist countries are those that are a growing threat to international financial security because of the ongoing terror financing and money laundering activities. Greylisting is a warning. A country that fails to put curbs on the mentioned activities, is shifted to Blacklist. A Greylisted country might face these restrictions:
Economic sanctions from supranational bodies like World Bank, International Monetary Fund, etc.
Loan curbs from supranational bodies.
Trade curbs by FATF member nations and other nations.
General international curb.
Why Pakistan? In June 2018, FATF put Pakistan on the Greylist and asked it to strengthen its structural and regulatory environment to properly identify, assess, and combat Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT). FATF presented Pakistan with a 27 point Action Plan, the covering or compliance of which before October 2019 would decrease chances of Pakistan being added in the Blacklist. As of mid-2019, Pakistan did not comply with 25 of 27 action points that included regulatory and legal action against terrorist group leaders, money laundering, and terror financing. This is not the first time Pakistan is under Greylist. In 2008 and from 2012-15, Pakistan was on the Greylist. In the current greylist period, Pakistan might face the risk of downgrading its credit score by international agencies like Moody’s and Fitch. FATF member nations and other world nations might impose a trade restriction on Pakistan. Economic sanctions could be placed by the World Bank, IMF, etc. After Pakistan failed to comply with the October 2019 deadline, it was given an extension of another 4 months after which in a FATF meet at Paris, Pakistan’s fate was decided. In the FATF meet in Paris, the organization noted that Pakistan has made progress on 14 of the 27 action plans. Pakistan had sentenced LeT leader Hafiz Saeed a few days before the FATF meeting. With the vote of countries like Malaysia and Turkey, Pakistan saved itself from going to the Blacklist. However, if Pakistan is not added back to the Whitelist before April 2020, it would automatically be blacklisted.
The US and China have decided to get Pakistan off the FATF “Grey List” instead of upgrading to “Black List” —notified Terrorist Nation. This is a huge set back for India if it happens. Namo should hold a review then to discover why we are sliding down in international stature — Subramanian Swamy (@Swamy39) January 24, 2020
Geopolitical Game India has been staunch on blacklisting Pakistan after the Pulwama and Balakot attacks. India has alleged Pakistan of financing terrorist groups like Jaish-e-Mohammed (JeM), Lashkar-e-Taiba (LeT), and Hizbul Mujahideen (HM). US has been putting a lot of pressure on Pakistan as part of US’s agenda to curb terrorism. China, which is also the chair of the FATF, had always backed Pakistan in FATF. However, China along with Saudi Arabia seems to have aligned with US, European Union, and India to put a leash on Pakistan’s money laundering and terror financing activities.
Curiopedia
Lashkar-e-Taiba, literally Army of the Good, is one of the largest and most active Islamist terrorist organizations in South Asia, operating mainly from Pakistan. It was founded in 1987 by Hafiz Saeed, Abdullah Azzam and Zafar Iqbal with funding from Osama bin Laden. Its headquarters are in Muridke, near Lahore in Punjab province of Pakistan, and the group operates several training camps in Pakistan-administered Kashmir. Lashkar-e-Taiba has been accused by India of attacking military and civilian targets in India, most notably the 2001 Indian Parliament attack, the 2008 Mumbai attacks and the 2019 Pulwama attack on Armed Forces. Its stated objective is to introduce an Islamic state in South Asia and to “liberate” Muslims residing in Indian Kashmir. More Info
Jaish-e-Mohammed, literally “The Army of Muhammad”, is a Pakistan-based Deobandi jihadist Islamic Jihadis group active in Kashmir. The group’s primary motive is to separate Kashmir from India and merge it into Pakistan. Since its inception in 2000, the terror outfit has carried out several attacks in the state of Jammu and Kashmir. It projects Kashmir as a “gateway” to the entire India, whose Muslims are also deemed to be in need of liberation. After liberating Kashmir, it aims to carry its ‘jihad’ to other parts of India, with an intent to drive Hindus and other non-Muslims from the Indian subcontinent. It has carried out several attacks primarily in the Indian state of Jammu and Kashmir. It also maintained close relations with Taliban and Al-Qaeda in Afghanistan and continues to be allied with these groups. Scholars state that JeM was created with the support of Pakistan’s Inter-Services Intelligence (ISI), which uses it to fight in Kashmir and other places, and continues to provide it backing. The JeM has been banned in Pakistan since 2002, but resurfaced under other names. More Info
Hizb-ul-Mujahideen, meaning “Party of Holy Warriors” is a pro-Pakistani militant organization that is active in the regions of Jammu and Kashmir and seeks for the integration of Jammu and Kashmir with Pakistan. Founded by Muhammad Ahsan Dar in September 1989 with support of ISI, it is considered as one of the most important players that evolved the narrative of Kashmiri conflict from nationalism to the religious lines of jihad and is widely deemed as the military wing of Jamaat-e-Islami. Its headquarters are located at Muzaffarabad in Azad Kashmir and a liaison office is maintained at Islamabad, capital of Pakistan. The group has been designated as a terrorist group by India, the European Union, and the United States. It continues to operate within Pakistan. More Info
Curated Coverage
Indian Express – China joins India, US to set new deadline for Pakistan
NDTV – Pakistan Stays On Terror Funding ‘Grey List’, Escapes New Sanctions: Sources
Economic Times – Pakistan to continue in FATF Grey List despite lobbying
Dawn – Pakistan on FATF’s grey list: what, why, and why now?
Jagran Josh – What is the Grey List and Black List of the Financial Action Task Force?
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