Will Pakistan move out of Grey List? Crucial FATF plenary at Paris

The crucial Financial Action Task Force (FATF) plenary at Paris starts today to decide whether Pakistan stays in or out of the 'Grey List' it is currently placed in. The FATF is an inter-governmental body established in 1989 to combat money laundering, terrorist financing and other related threats to the integrity of the international financial system. Pakistan can either be moved out of the Grey List or into the Black List. If blacklisted, the country will join the ranks of Iran and North Korea, and find it extremely difficult to access funds for an already crippled. If Pakistan is whitelisted, it will be easy for the country to get financial aid from the IMF, World Bank, ADB and the European Union, helping improve its precarious financial situation. Pakistan requires about 15-16 votes to move out of the Grey List and a minimum of three votes to avoid falling into the blacklist. The FATF currently comprises 36 members with voting powers and two regional organisations, representing most of the major financial centres in all parts of the globe.

In January, Indian officials had claimed that there is a good chance Pakistan could get out of the Grey List. There is active support from China, and tactical support of some Western countries. Other reports claimed Pakistan may remain on the FATF's Grey List beyond February 2020 for money laundering and terror financing due to its "risk profile". At a meeting of the Financial Action Task Force (FATF) held in Beijing in January, Islamabad submitted its compliance report and got support from the FATF current chair and its "all-weather friend" China and a few Western powers.  

"The next plenary of the FATF will be held in Paris and Pakistan needs just 12 votes out of 39 to exit the Grey List and move to White List. There is a strong possibility of Islamabad getting enough support to exit the Grey List," an Indian official privy to the development had said then. In recent meetings of FATF, Pakistan has got support of Malaysia and Turkey besides China. "We will be supporting Pakistan at the Financial Action Task Force meetings, where Pakistan is subject to political pressure," Turkish President Recep Tayyip Erdogan had told Pakistan's parliament on Saturday. 

If Pakistan could convince a few Western nations with their report of taking action against terrorists, the country will be out of FATF Grey List, which will be a cause of worry for India, the official said. In the Beijing meeting, Pakistan provided a list of its action taken to comply with the FATF diktat. Pakistan was placed on the Grey List by the FATF in June 2018, and was given a plan of action to complete it by October 2019 or face the risk of being placed on the blacklist along with Iran and North Korea.

On January 24, senior BJP leader Subramanian Swamy had tweeted: "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 [PM Modi] should hold a review then to discover why we are sliding down in international stature."

The FATF plenary had noted in its last meeting held in October 2019 that Pakistan addressed only five out of the 27 tasks given to it in controlling funding to terror groups like the Lashkar-e-Taiba, Jaish-e-Mohammad and Hizbul Mujahideen, responsible for a series of attacks in India. The FATF said it strongly urged Pakistan to swiftly complete its full action plan by February 2020.

Just days before the FATF meet, Pakistan had sentenced Hafiz Saeed, the mastermind behind the 2008 Mumbai attack and the Jamat-ud-Dawa (JuD) chief, to 11 years in two terror financing cases. The FATF in October had last decided to keep Pakistan on its Grey List for its failure to curb funnelling of funds to terror groups like LeT and Jaish-e-Mohammad. The US had welcomed the conviction of Saeed and said that his sentencing was an important step forward for Pakistan in meeting its international commitments to combat terror financing and holding the LeT accountable for its crimes.

In the Beijing meeting, Pakistan provided a list of its action taken to comply with the FATF diktat. 

India's focus

New Delhi has focusing on strengthening its case against Islamabad, to place it in the FATF Black List, for its failure in taking action against terror-financing and the Fake Indian Currency (FICN) menace. The continuing worry of the Indian security agencies is the inability so far to dismantle the sophisticated currency production machines, which produce ‘high quality’ FICN, close imitations of genuine Indian Currency Notes (ICN). Besides being smuggled into India, it has also created self-financing criminal networks in Middle-East, South-East and South Asian regions and China, said an official. "Pakistan’s primary objective in infusing FICN is to finance terror, use the network for espionage purposes and to attempt economic de-stabilisation," said the official.

New Delhi has been taking steps to gather strong evidence against Pakistan, foremost being to strengthen the FCORD (FICN Coordination Cell) set up within the Intelligence Bureau in 2010 to have effective coordination with state agencies for higher seizures. The latest data of the National Crime Records Bureau has shown a spike in seizure of fake currency. Rs 28.1 crore worth FICN was seized in 2017 against Rs 15.9 crore in 2016. 

Sources in intelligence agencies told THE WEEK in October 2019 that Pakistan has been under FATF observation for eleven years. But, they said, Pakistan's flagrant violations of FATF standards has gone on for too long. It was in the year 2008-2010, that Pakistan was put on the blacklist by the international terror financing watchdog,  followed by the Grey List between 2010-15. It was then placed under the observation of International Cooperation Review Group (ICRG) between 2015-18 to review the risks posed to international financial system, and since then Pakistan has been on the Grey List.

-Inputs from PTI, Namrata Biji Ahuja