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FATF and Pakistan's Terror List (28 August 2020)

FATF and Pakistan's Terror List (28 August 2020)

Why in News:

The Pakistan government issued two notifications on August 18 announcing sanctions on key leaders of terror outfits.

Context:

In an attempt to be dropped from the Financial Action Task Force’s grey list, Pakistan has banned 88 new terrorists, in compliance with the new list issued by the United Nations Security Council (UNSC). The banned terrorists include 26/11 Mumbai attack mastermind and Jamaat-ud-Dawa (JuD) chief Hafiz Saeed, Jaish-e-Mohammed (JeM) chief Masood Azhar, and underworld don Dawood Ibrahim.

Background:

Paris-based FATF put Pakistan on the grey list in June 2018 and asked Islamabad to implement a plan of action by the end of 2019, but the deadline was extended later due to the Covid-19 pandemic.

Earlier this month, the Pakistani Parliament had cleared four bills linked to the conditions set up by the FATF.

Summary of the Debate

Action taken by Pakistan:

  • In view of the pandemic, the 3-month extension was given by the FATF.
  •  It was given time until October 2019 to complete a 27-point action plan on countering terror finance and anti-money laundering.
  • The anti-money laundering prosecution, 354 cases have been taken up by Pakistan as per the record they have put before the FATF, whereas only one conviction has resulted out of these 354 cases.
  • The track record on terrorist financing is slightly better, 228 cases have been registered and 58 convictions have taken place including that of Hafiz Mohammad Saeed, who is presently kept on a five year sentence in Lahore.
  • Pakistan has only completed about 14 points so far.

Financial Action Task Force

  • FATF is an inter-governmental body established in 1989 on the initiative of the G7. It is the global money laundering and terrorist financing watchdog.
  • The FATF Secretariat is housed at the OECD headquarters in Paris.
  • The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society.
  • Initially it was established to examine and develop measures to combat money laundering.
  • In October 2001, the FATF expanded its mandate to incorporate efforts to combat terrorist financing, in addition to money laundering.
  • In April 2012, it added efforts to counter the financing of proliferation of weapons of mass destruction.
  • FATF has 39 members, which comprise 37 member jurisdictions and 2 regional organisations.
  • India became a full member in 2010.
  • The FATF monitors countries to ensure they implement the FATF Standards fully and effectively, and holds countries to account that do not comply.
  • The “black list” refers to countries for who there has been a “call to action” or strict banking and international finance sanctions, a list which at present includes Iran and North Korea. Pakistan is one of the 12 countries on the “grey list” or “other monitored jurisdictions” that are being reviewed for actions to stop terror financing and money laundering.

Black List:

Countries knowns as Non-Cooperative Countries or Territories (NCCTs) are put in the blacklist. These countries support terror funding and money laundering activities. The FATF revises the blacklist regularly, adding or deleting entries.

Grey List:

Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.

             Pakistan escapes FATF blacklist, but gets warning - Newspaper - DAWN.COM  

Conclusion:

  • More pressure can be put on Pakistan by India, so that Dawood is given back to India. 
  • Pakistan will try its best to come out of the grey list and there is the chance that China will go out to make sure it gets out of it. So, India needs to be cautious of China and to take pre-emptive measures also.
  • India has to diplomatically and politically make sure that Pakistan remain in a grey list at least and that we can do it by exposing Pakistan.
  • One interesting development which might happen in this interim period between now and October and that is the appeal that is pending against the acquittal of Omar Saeed Sheikh in the Daniel Pearl killing by the Sindh High Court, now the appeal against that is pending in the Supreme Court of Pakistan likely to come up for hearing on September 25.

Important points made by the Guests

Rana Banerji, Former Special Secretary, Cabinet Secretariat 

  • The mutual evaluation report of the FATF, which was issued in October 2019, it mentioned that there are several agencies now which are looking into the 13 out of the 27 actions in which Pakistani compliance was found to be wanting and the problem is that there are only shortfalls in coordination between these various domestic agencies and also mitigation measures which are not found to be adequate as per the risk assessment norms that the FATF has prescribed for other countries.
  • Technically, Pakistan has denied the very next day, the foreign office has said that “this is a statutory regulatory order, a follow up action which we have taken and it does not mean that Dawood is in Pakistan”.
  • Pakistan will not give up on their proxy actors whom they have used for so long, the Dawood Ibrahim has been a very major utility agent type of player in all their actions that have led to him being also identified as a global terrorist, it happened in 2003, when he was considered to have aided in the financing networks of the Al-Qaida. So, the west definitely has specific evidence which led to the 2003 ostracization.
  • Thereafter, Dawood has not been able to travel out of Pakistan despite reports that he may have undertaken plastic surgery to change his appearance. In the past he used to at least able to go to UAE on various Pakistani passports under different names to look after his own business, but thereafter he has not been able to travel so much.

Maj. Gen. Ashwani Siwach (Retd.), Defence Expert

  • First time Pakistan is now accepting that Dawood Ibrahim is in Pakistan, he is staying in Karachi in White House.
  • Every time, whenever there is a meeting which is taking place of FATF, they take some sort of action against this terrorist organization and the terrorists and thereafter, once this meeting is over their business is as usual.
  • They intimidate them well in time, the three restrictions which are imposed basically that their movable and immoveable properties are seized, their bank accounts are frozen and there is a restriction on them on moving abroad, but all these have no meaning because they are intimated well in time except moving abroad is the one which is the actual restriction.
  • Pakistan is not very serious in taking action against money laundering and terrorist funding. Whatever they are doing, it is basically they are under tremendous pressure, because the FATF is keeping the track record may try to put them in a blacklist and they want to get out of the grey list.
  • Today, Pakistan has $ 115 billion debt they have taken from different countries as a loan, and they have to pay $ 4 billion every year, they have to take loan to pay the interest of the loan. They have got foreign reserve of less than $ 10 billion, which cannot even look after one month of their import.    
  • Their foreign exchange reserve is less than Afghanistan, the inflation today is more than 15 percent, no investment is coming, the Pakistani rupees has come down 30 to 40 percent in last two-three years compared to dollar.
  • The chances of placing them in blacklist are very less for the reason that they have got three friends; Turkey, China and Malaysia, they are unlikely to be placed in a black list, but they may not come out of the grey list and put in a white list, because the track record is still not very good.
  • To come out of the grey list it requires 15 members out of these 37 members of FATF.
  • As far as USA attitude towards Pakistan is concerned, then to some extent USA need Pakistan especially when it wants to exit from Afghanistan. So, USA may have soft corner as far as Pakistan is concerned that it will not try to push it to blacklist.

 Ashok Sajjanhar, Former Ambassador

  • Pakistan was put on the grey list in June 2018 and it is desperate to get out of the grey list, it wants to come out on the white list. There were a number of conditions that had been imposed that it had to meet, if it wanted to get out of that grey list.
  • So, it has been trying to do that desperately and this list is to be submitted to the FATF, by early next month the plenary meeting will take place in October. The meeting to discuss this actually should have taken place in June, but because of Covid, it did not take place in June. So, now it has been postponed, so the matter will be considered in October of this year.
  • Pakistan’s economy is in shambles, it is not getting any inward investments and its economy is really going down the drain.
  • Saudi Arabia, because of Pakistan‘s bad economic condition had two years ago advanced some funds to it about $ 3 billion for budgetary support and 3 billion in terms of subsidized oil supplies. But, because of what Pakistan has sort of warning or threat that it has issued on the question of Kashmir that Saudi Arabia is not organizing the meeting of the OIC on Kashmir. Saudi Arabia had withdrawn, asked it to reimburse the $ 1 billion, which Pakistan had to go to China.
  • Last year, there was a pressure in June 2018, when this grey list was extended that it should be put in the blacklist, but that did not happen because three countries came to its support, China, Turkey and Malaysia.
  • Right now, Pakistan wants to show that it has made significant progress on the demands of FATF and in that context, it has put out this list, which has designated these terrorists, which has sought to freeze their assets and also it has acknowledged that Dawood Ibrahim is on its territory and it also tried to put through two bills; one on Anti-money laundering and other on the Waqf properties in the Islamabad capital territory.
  • These two unfortunately for Imran Khan were turned down in the senate and now they will go to a joint session of the Parliament.
  • Pakistan is a victim of its own policy; it is not a victim of terrorism. It is following terrorism because of its policies, there is no foreign engineered terrorism against it, not from India, not from Afghanistan and not from anywhere else.
  • Prime Minister of Pakistan does not have the power, it does not have the authority, even if he wanted to take some action, the Pakistani Army will not allow him to do it.

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