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Focus on action against Pakistan as FATF meet begins

Pakistan is on the "grey list" of the multilateral watchdog, which counters money laundering and financing

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India, Oct. 21 — The Financial Action Task Force (FATF) will begin a three-day virtual plenary meeting on Wednesday that will decide on the next course of action against Pakistan with regard to steps taken by the country to crack down on fund-raising by terror groups.

Pakistan’s case

The multilateral watchdog, which counters money laundering and terror financing, put Pakistan on its list of “jurisdictions under increased monitoring” or “grey list” in 2018 for not doing enough to curb financial activities of terror groups. The grey list now has 18 countries, ranging from Iceland to Mauritius and Panama, and most of these nations have been cited for lax money laundering regimes and none face as serious charges related to terror financing as Pakistan.

After a plenary meeting in February, FATF warned Pakistan that all deadlines set for implementing an action plan against terror financing had expired, and that the country had largely addressed only 14 of 27 action items in the plan. According to a more recent assessment, Pakistan is understood to have largely addressed about 20 action items. However, FATF’s regional affiliate Asia-Pacific Group (APG) concluded last month Pakistan has fully complied with only two out of 40 recommendations to curb money laundering and terror financing.

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The of non-profit organisations (NPOs) and registered charities by groups such as Lashkar-e-Taiba was cited by APG in its latest report as a “significant threat”, and the group retained Pakistan in its “enhanced follow-up” category.

Terror financing

Combating terror financing has been a priority for FATF since 2001. FATF plays a key role in global efforts to fight terror financing by setting global standards, assisting countries to implement financial provisions of the United Nations Council resolutions on terror, and evaluating their ability to prevent, detect, investigate and prosecute the financing of terrorism. FATF carries out assessments throughout the year of countries on the grey list, though this work has been curtailed in by the pandemic. Much of its work in Pakistan has been focused on getting the to introduce laws to enforce UN sanctions, improve coordination between different organisations and enforcement agencies, and prosecution of terrorists involved in fund-raising.

Though Pakistan has arrested LeT founder Hafiz Saeed and a handful of other terrorist leaders and successfully prosecuted several of them – Saeed was given a term of five-and-a-half years in February – there have been other developments that have been criticised by Western nations. For instance, Pakistani authorities have removed some 3,800 names from a terror watch list this year. Pakistan has also enacted some 10 new laws for freezing and seizing the assets of terror groups and to impose fines and terms for terror financing but FATF has said enforcement and prosecution needs to improve further.

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What’s next

Pakistan is widely expected to remain in the grey list, with very little chance of being included in FATF’s list of “high-risk jurisdictions subject to a call for action” or “black list” – which currently has only two countries, Korea and – for a variety of reasons. Some Western countries are reluctant to push for stiffer action against Pakistan at a time when it is perceived as crucial for the trouble peace process in Afghanistan, while the backing of just three of FATF’s 39 members is adequate to keep it out of the black list. Pakistan has in its corner and its leadership has reached out to , Arabia and for . What remains to be seen is how much leeway FATF will give to Pakistan to deliver on the action plan against terror financing.

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