Grey-List Removal, FATF’s Informal Nod By Syed Qamar Afzal Rizvi

AFTER all, Pakistan is likely to move on the path of FATF’s white listing as the Paris-based FATF body in its plenary session held in Berlin (June 14-17) gave its quasi nod regarding Pakistan’s removal from the grey-list on the condition of its qualifying the on-site visit by the FATF delegation who will shortly visit Pakistan to make an objective appraisal of the reforms and initiatives taken by Pakistan in order to satisfy the FATF forum.

Being placed on the FATF grey-list since June-2018, Islamabad has been consecutively approaching the FATF body for its removal from the grey-list.

According to the statement issued by the FATF Board, ‘’Pakistan has substantially completed all items on both its action plans, which showed that necessary political commitment was in place to sustain implementation and improvement in the future’’.

Minister of State for Foreign Affairs Hina Rabbani Khar said, “Our success is the result of four years of a challenging journey.

Pakistan reaffirms resolve to continue the momentum and give our economy a boost’’.

Marcus Pleyer, President of the international monetary watchdog said, ‘’FATF is praising Pakistan for implementing the organisation’s action plans — a clear indication that Pakistan is moving closer to getting off the “grey-list”.

In the past, one line of thinking that prevailed in Islamabad reflects the impression that FATF listings are designed to pressure Pakistan into the US-driven geopolitical interests.

They argue that makes FATF’s involvement more political than technical in nature, it is why that Time to Time, Pakistan has been arguing, “International bodies dealing with tax matters, corruption and illicit financing should be inclusive and representative.

They should not be used as instruments of pressure and coercion against developing countries.

” Already in a precarious economic situation with high inflation, rampant unemployment, a declining GDP, foreign exchange reserves at a mere $12 billion, Gross Public Debt rising from 72% of the GDP at $95 billion (2018) to 87% at $112.8 billion currently, and external debt servicing charges of $11.9 billion in 2019-20, the FATF grey-listing has hit the country hard.

The irony of the situation is that Khan, instead of taking the more difficult but infinitely more healthy and rewarding option of reining in his military and curbing its terror-happy ways, has opted to vent his frustration by baselessly accusing an international organization, the FATF, of pressure and coercion’’.

Technically, the grey-list status is subject to close monitoring, but cooperating with international watchdog to address systemic deficiencies so that money laundering, terrorism funding and proliferation financing can be countered.

Pakistan is reported to have duly complied with 34 action points recommended by FATF, including clamping down on illegal money transfer services.

Needless to say, the global world order underwent a drastic geopolitical shift ushered in by the post 9/11 era and consequently Financial Action Task Force (FATF) became a lynchpin institution for monitoring counter-financing of terrorism, and money laundering.

It expanded its scope and power to categorize countries with weak financial institutions and urged them to comply action plan.

Pakistan was put into the grey-list for slow progress regarding compliance to the United Nations Security Council Resolutions (UNSCR-1617, 1267 and 1373).

Interestingly, as the global order swings towards a new shifting ‘’from kinetic warfare towards non-traditional warfare, economic’’ policies are deliberately used to wage a war that can destroy the developing nations or the developing economies vindicated by the fact that the FATF remains a perpetual instrument of economic coercion against the poor nations..

Thus, over the years, many international organizations seemed to have been formed of promoting growth, stability and development.

Undeniably, these organisations might have had been established with honest intentions but the record is indicative of the fact that they have had been used as political and diplomatic weapons to coerce, tempt and bribe.

The FATF claims that it aims at reducing money laundering, terrorism financing and strategic flaws in the international financial system.

In 2018, FATF placed Pakistan on its grey-list of countries with weak mechanisms, and Pakistan agreed to work with the agency to strengthen them.

The placement made foreign firms more cautious about investing in Pakistan, which is dealing with a struggling economy and a balance-of-payment crisis.

Michael Kugelman, an expert on South Asian affairs at Washington’s Wilson Centre, described FATF’s approval of Pakistani efforts as a “giant leap forward” in its bid to exit the grey-list.

“Facing a worsening economic crisis and having been stuck on the list for four years, a status that has some reputational costs and may deter some investors, this couldn’t come at a better time for Pakistan.” “…

as investors/banks would no longer have to worry about any reputational risks associated with doing business with Pakistan while it’s on a watch list for terrorist financing.”

According to Adams Weinstein, a research fellow specialising in Pakistan and Afghanistan at the Quincy Institute said, ‘’lifting Pakistan from the list will remove one more barrier to foreign direct investment, but many other self-inflicted ones will still exist. ’’ Ostensibly, Pakistan’s economy is dependent on international investors.

If the country remains out of the FATF’s grey-list, it will positively continue to impact its imports, exports, and remittances, thereby removing bar to international loans.

Pakistan will also be in a better position to negotiate loans from the World Bank and the IMF

Sharing details of the FATF plenary session in Berlin, Pakistan‘s Minister of State on Foreign Affairs’, Hina Rabbani Khar said, ‘’during the meeting, the recommendations of the FATF’s International Cooperation Review Group (ICRG) on Pakistan’s 2018 and 2021 Action Plans were discussed’’.

She said on 2021 Action Plan related to money laundering issues, Pakistan had completed the entire seven-point action plan a year ahead of the prescribed timelines.

“This swift pace and progress is indicative of the comprehensive reforms and action that have been carried out by Pakistan in the AML/CFT domain and sustained momentum of our efforts,” she maintained.

A neutral and objective appraisal regarding Pakistan’s legal and structural reforms taken against money laundering and terror financing suggests that no country in the span of four years has taken so seriously about the FATF agenda as that of Pakistan.

This clearly indicates the seriousness and promptitude of the Pakistan government regarding the FATF demands.

FATF’s pro-Pakistan findings must help negotiate with the IMF. It is virtually expected that by concluding its upcoming on-site visit, the FATF delegation will maintain its neutrality while appraising the Pakistani case and would finally approve the delisting of Pakistan from its grey-list.

The economic prosperity of Pakistan is core to the south Asian regional stability.

—The writer, an independent ‘IR’ researcher-cum-international law analyst based in Pakistan, is member of European Consortium for Political Research Standing Group on IR, Critical Peace & Conflict Studies, also a member of Washington Foreign Law Society and European Society of International Law.​

Source: Published in Pak Observer

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