Remaining on the grey list of the Financial Action Task Force for possibly one more year is the least of Pakistan’s worries. It must be hoping that the Force’s insistence on investigating and prosecuting leaders of UN-designated terror groups living on Pakistani territory does not clash with the role it wants in influencing the future of neighbouring Afghanistan. Some of the terrorist groups the Force wants prosecuted and punished not only enjoy shelter in Pakistan but they are also the chief elements impeding the return of peace to war-torn Afghanistan once the United States fully withdraws itself from that country.
The FATF has asked Pakistan to complete three tasks at once. They are: “(1) demonstrating that terrorist financing investigations and prosecutions target persons and entities acting on behalf or at the direction of the designated persons or entities; (2) demonstrating that terrorist financing prosecutions result in effective, proportionate and dissuasive sanctions; and (3) demonstrating effective implementation of targeted financial sanctions against all 1,267 and 1,373 designated terrorists, specifically those acting for or on their behalf.”
In its plenary last month, the Force noted “serious deficiencies” in Pakistani actions to check terror financing. It told Pakistan at the end of the meeting: “The FATF encourages Pakistan to continue to make progress to address as soon as possible the one remaining CFT (counterterrorist financing)-related item by demonstrating that TF (terrorist financing) investigations and prosecutions target senior leaders and commanders of UN-designated terrorist groups.”
The Force plenary meets again in October and it is difficult for Pakistan to complete the above task in the next three months. In fact, Pakistan is not showing much willingness to take action against the leaders of the terror groups. It is supposed to take action against leaders and commanders of eight terror groups named by the Force in the past: the Afghan Taliban, Haqqani Network, Lashkar-e-Taiba (LeT), Jaish-e-Mohammed (JeM), Jamaat-ud-Dawah (JuD), Falah-e-Insaniyat Foundation, al Qaeda and Islamic State.
Pakistan has to date prosecuted senior leaders of LeT and JuD. LeT leader Hafiz Sayeed is also serving a prison sentence in a terror financing case. However, there are doubts about the kind of imprisonment Sayeed is facing given the rumours that he continues to be in touch with his cadres as and when required. The JeM chief, Masood Azhar, has escaped action so far even though he has been held responsible for several terror attacks. Much of the Afghan Taliban leadership, which lives in Pakistan, is also yet to face any action and it continues to engage in campaigns to raise funds for its terror campaigns. It is also involved in unleashing violence and terror attacks in Afghanistan in a bid to capture territory in the backdrop of the withdrawal of the US troops from the country.
On the one hand, Pakistan gives shelter and patronage to these terror groups. On the other, it aspires for an influential role for itself in post-withdrawal Afghanistan. However, if it is forced by the FATF to take action against these terrorist leaders, it will find its relationship with them in tatters. That does not augur well because these terror groups can as well target Pakistan if things go against them.
Compounding Pakistan’s problems, it finds itself slapped with a new action plan designed by the FATF. It has to do with anti-money laundering (AML) and countering the financing of terrorism (CFT). The first four of the six elements of the plan are: (1) enhancing international cooperation by amending the Mutual Legal Assistance law; (2) demonstrating that assistance is being sought from foreign countries in implementing UNSCR 1373 designations; (3) demonstrating that supervisors are conducting both on-site and off-site supervision; (4) demonstrating that proportionate and dissuasive sanctions are applied consistently to all legal persons and legal arrangements for non-compliance with beneficial ownership requirements.
The last two points are the most crucial. The fifth one is “demonstrating an increase in ML investigations and prosecutions and that proceeds of crime continue to be restrained and confiscated in line with Pakistan’s risk profile, including working with foreign counterparts to trace, freeze, and confiscate assets”. This would require Pakistan to freeze all assets of the terror groups in the country and seeking help of all countries where these terror groups operate. The last point deals with ensuring sanctions are being imposed for non-compliance.
Once Pakistan completes the tasks from the old plan, the FATF will decide to hold an on-site inspection to check Pakistan’s claims. Usually, the Force decides to delist a country from the grey list upon successful completion of the inspection. However, it may not be so in Pakistan’s case because the country has then to complete the six-point new plan of the FATF.
President of FATF Marcus Pleyer told the media: “But in this case, we have a parallel action plan with all the action items…and then Pakistan must also largely complete all the items on this action plan. It will be a separate on-site to decide on this action plan. So the delisting will not occur before both action plans are completed and two on-sites have been granted and successfully completed, and have shown that the improvements are sustainable before the FATF members decide on delisting.”
The ball is now in Pakistan’s court. It has somehow managed to avoid being blacklisted by the FATF in the last two years by initiating sufficient action to be kept in the grey list, just a step below blacklisting. It has also to contend with the sharp scrutiny of its actions by the FATF’s International Cooperation Review Group which includes the US, the UK, France, China and India.
However, there is ambiguity over the influence of the FATF after the Americans withdraw from Afghanistan. Pakistan would of course hope for a diminished influence and find a way of convincing the United States of its relevance as an arbiter between the clashing Taliban and the national forces in Afghanistan.