Amidst the gloom and despondency in the country in the wake of the onslaught of the deadly coronavirus comes the good news that the Financial Action Task Force (FATF) has given another five-month grace period to Pakistan to submit its performance report on 13 outstanding benchmarks for foolproof arrangements against money laundering and terror financing. The review session scheduled for 21-26 June has been postponed till October. It is indeed a welcome moratorium by FATF which would allow Pakistan to remove all the discrepancies pointed out by FATF and have the opportunity to get out of the grey list which is hanging over the country like the proverbial sword of Damocles. In February, the financial watchdog gave Pakistan four months to complete its 27-point action plan against money laundering and terror financing noting that Pakistan had delivered on 14 points and missed 13 other targets.

It is pertinent to point out that the inclusion of Pakistan in the grey list of the FATF had political overtones. Pakistan was put on the grey list by FATF in June 2018 as a result of the US resolution supported by its allies and other countries. Placing Pakistan on the grey list was surely a political move by US with a view to keep Pakistan under pressure. It was very much expected in the backdrop of the nosedive in relations between Pakistan and USA since the announcement of the new policy on South Asia and Afghanistan by President Donald Trump and its outright rejection by Pakistan. It was the most unfortunate development in view of the fact that Pakistan, which had been a US ally since the early fifties and had suffered the most in the war against terrorism, remained a suspect in the eyes of the latter in regards to its indiscriminate action against terrorist outfits.

The reality was that Pakistan had been a sincere partner in the war on terror and had not only dismantled the infrastructure of all the terrorist outfits based on its territory including North Waziristan but was also faithfully engaged in eliminating the remnants of their supporters within the country. It had also taken all possible administrative and legal measures to check and block the sources of funding to terrorist organisations. Pakistan had already promulgated a Presidential Ordinance to amend the anti-terror legislation in order to include all UN-listed individuals and groups in the national listings of proscribed outfits and persons. The Securities and Exchange Commission of Pakistan (SECP) also took measures in keeping with FATF regulations and issued Anti-Money Laundering and Countering Financing of Terrorism Regulations 2018. The government had also chalked out a comprehensive plan to eradicate terrorist financing which was shared with the international watchdog. The FATF decision was reflective of the US rhetoric to ‘do more’. It was also indicative of how much influence the US could exercise on world bodies like FATF.

However, the kink in the relations between the two countries disappeared in the backdrop of Pakistan facilitating dialogue between US and Taliban, a role acknowledged and appreciated by President Trump and his administration. It was due to this development that despite the best Indian efforts during the Beijing and Paris meetings, Pakistan could avoid being pushed into the blacklist because no member of the FATF including US and EU supported the Indian view. The outcome of these moots represented a major blow to Indian diplomatic efforts to penalise Pakistan. However, Pakistan was not taken out of the grey list but was given another chance to fully comply with the action plan given by FATF by June 2020.

The change in the attitude of the US and its allies was also indicated by the statement of acting US assistant Secretary of State for South Asia Alice Well, when after the arrest of Hafiz Saeed and before the FATF meeting, she said, “Conviction of Hafiz Saeed is an important step forward in regards to both holding the LeT accountable for its crimes and for meeting commitments of the Khan government in combating terrorist financing.”

The Turkish President, during his visit to Pakistan while addressing the joint session of the parliament, also reiterated his country’s support to Pakistan on the issue. In fact, it was due to the support extended by China, Turkey and Malaysia that Pakistan could not be pushed to the black-list and has stayed in the grey list. The spokesman of the Chinese Foreign ministry referring to FATF decision had said, “In recent years Pakistan has actively taken measures to strengthen financial supervision and crackdown on terrorist financing and made important progress. We have always believed that great efforts and sacrifices made by the Pakistan government and people for the fight against terrorism are obvious to all. The international community must give full recognition and trust to these efforts and treat those efforts objectively and impartially instead of relying on criticism and pressure.”

In fact, Pakistan had done its homework well before the Beijing meeting on the diplomatic front. Besides taking administrative and legal measures to comply with FATF requirements, it also undertook intensive lobbying and diplomatic efforts to muster support for her cause. Foreign Minister Shah Mahmood Qureshi met US Secretary of State Mike Pompeo and discussed the issue with him seeking support for getting out of the grey list. The Prime Minister, in his meeting with President Trump on the sidelines of the Davos Forum – among other things – also deliberated on the issue of FATF.

In the October review meeting, Pakistan besides meeting the given targets, would also require diplomatic support for coming out of the grey list. According to the FATF regulations a country needs at least 3 votes for not being relegated to the black list and at least 12 votes for up-gradation to the white list. The FATF has 39 members. In view of recalibration of relations between US and Pakistan and the concrete and credible steps taken by Pakistan ever since placement in the grey list and the positive vibes emanating from the Beijing and Paris meetings it could be genuinely hoped that things would have a positive outcome when Pakistan gets the chance in October to present its case before FATF. Official sources have revealed that Pakistan has put in place a broad-based strategy for taking necessary action to complete the outstanding commitments with the FATF.

Pakistan’s removal from the grey list and up-gradation to the white list is absolutely imperative in regards to getting financial support from international lending agencies for financing its economic reform agenda and putting the country on the road to sustained economic growth besides political gains on the international level.

Malik Muhammad Ashraf

The writer is a freelance columnist.

ashpak10@gmail.com