Brig Anil Gupta
Despite its intensive lobbying and cosmetic measures to convince the Financial Action Task Force (FATF) to take it off the Grey List in which it was placed in June 2018, the international watchdog has once again placed Pakistan in the saidList with a stern warning to be prepared to be placed in Black List if it does not complete the full action plan by June. It was not for the first time that Pakistan was being named and shamed by clubbing it with countries like Ethiopia, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen. It had been similarly placed in the past in 2008 and from 2012-2015. In June 2018, Pakistan was given an action plan to be completed by October 2019, or face the risk of being blacklisted, the ultimate death knell for its shattered economy and to join the likes of North Korea and Iran. FATF’s reasoning is Pakistan’s “structural deficiencies” in anti-money laundering (AML) and combating financing of terrorism (CFT). However, Pakistan failed to implement the action plan to be able to negotiate an exit from the grey list. At the same time it successfully averted the blacklisting with active support of China, Malaysia and Turkey and was given additional time to comply with the plan of action. Entry and exit from FATF’s grey list is an ongoing exercise. Pakistan’s exit or blacklisting was to be decided during its next plenary to be held in February 2020 at Paris as announced by the FATF on conclusion of the October 2019 plenary.
To understand the charter of FATF and why Pakistan is on its target list, it is necessary to understand the terms money laundering and terror financing. In simple terms, money laundering pertains to disguising money earned from a crime as money earned through legitimate sources. The crime could be corruption, drug trafficking, fake currency, fraud or tax evasion. Terrorist financing involves collection of funds to support acts of terror or terrorist organisations. A key difference between the two is that, in money laundering, the source of funds has to be a crime. In the financing of terrorism, funds may come from perfectly legitimate sources, such as donations from ordinary citizens, but the purpose has to be a crime.Pakistan has been charged with both and is accused of supporting terror groups like Haqqani Network, Jaish-e- Mohammad, Lashkar-e-Toiba. HizbulMujahideen and Taliban. However, Pakistan denies and plays the victim card. It quotes Global Terrorism Index 2017 by Institute of Economics and Peace, which describes itself as “an independent, non-partisan, non-profit think tank”,that ranks Pakistan as the fifth-most affected country from terrorism, behind Iraq, Afghanistan, Nigeria and Syria. Pakistan’s leadership feels that its placement in greylist is far more political than financial. Nothing can be farther from truth since Pakistan’s role as a fountainhead of terror has been exposed to the world on numerous occasions. Pakistan today is known world over to not only produce global terrorists but also harbour, train and finance various jihadi terror organisations particularly those involved in cross border terror against India and Afghanistan.
Ever since its placement in the grey list in June 2018, Pakistan has been seeing it as an attempt by USA to put pressure to “do more” on issues related to terrorism as had been openly demanded by the US President Trump. Pakistan is also convinced that If US can have Pakistan placed on the grey list, it can also make it easy for Pakistan to exit the list, if it is somehow able to contribute to American interests in the region. While it has been making cosmetic attempts to institute measures as per the plan of action suggested by the FATF, it has been concentrating more on lobbying and diplomacy to convince US and other members through it to remove it all together from the list of “not so good guys.”
In absence of any visible and concrete measures to mend “structural deficiencies” in AML and CTF, it was widely believed that Pakistan would be blacklisted during its October 2019 plenary at the end of 15 – month notice. Due to its burgeoning debt and shattered economy Pakistan could ill afford it. It was really shocked when the FATF Asia-Pacific Group (AGP) put Pakistan in ‘enhanced expedited follow up list (Black List) in its meeting held in August 2019 when its members found that Pakistan was non-compliant on 32 out of 40 compliance parameters. Pakistan put its diplomatic machinery in action to garner crucial three votes needed to prevent it from being blacklisted. With China in chair Pakistan felt assured of one vote but after the boldness shown by China by agreeing to list Masood Azhar as a global terrorist, it was widely believed that China may behave more maturely. China’s huge investment in Pakistan and the strategic relationship between the two nations tilted the balance in Pakistan’s favour. Ultimately, Pakistan succeeded in garnering the necessary three votes by China, Turkey and Malaysia voting in its favour. Pakistan managed to continue in grey list. Though it noted that Pakistan had addressed only five out of the 27 tasks given to it for AML and CTF, it asked Pakistan to act swiftly and complete the full action plan by February 2020.
Since terrorism is an instrument of Pakistan’s national policy and the real power centre in the country is its Army which uses cross border terrorism as part of its military strategy, it is well-nigh impossible for Pakistan to divorce itself from terrorism. It once again doubled its lobbying and diplomatic efforts. Imran Khan dashed to the friendly member countries and the USA to garner support. This time it found needy Trump to be more amenable than before since it needed Pakistan’s assistance in Afghanistan and Iran. With China and US on its side Pakistan took few measures including arrest of Hafiz Saeed and custody of Azhar Masood. It got a shot in the arm when during its three- day review meeting held in Beijing in January 2020 FATF noted that Pakistan has taken satisfactory steps against terror groups. It satisfactorily evaluated Pakistan’s compliance efforts in relation to money laundering and terror financing. Member countries like US, UK, Japan, Australia and New Zealand did not raise any concern this time. Pakistan’s game plan of successful lobbying at the cost of compliance seemed to be bearing fruit. The logic was simple. It was an election year in USA. Trump needed Pakistan’s assistance in Afghanistan and Iran. This appeared to have shaped America’s stance to go soft on Pakistan during the February plenary in Paris. It accordingly convinced its allies and Pakistan facing the prospect of being blacklisted at the end of October plenary, now began dreaming ofexit from the grey list even.
India which knew the ground reality well and has been the worst sufferer of Pak sponsored terrorism including money laundering and terror financing the separatist movement in Kashmir got a rude shock as it was hoping that due to its poor record of compliance Pakistan would definitely be blacklisted this time. Having understood the American game plan India began to act swiftly to minimise the danger by ensuring that Pakistan does not get off the grey list till its compliance is fully confirmed and it is unable to hoodwink the watchdog. India now began to exert its influence to ensure that Pakistan is unable to garner support of 15-16 member nations needed to remove it from grey list. It provided dossiers and sufficient evidence to the FATF of Pakistan’s continued involvement in money laundering and terror financing. India was apprehensive that any such decision by the anti-terror body would provide oxygen to terrorist groups like LeT, JeM and HM leading to increase in terrorist activities in J&K and Punjab, where Pakistan was desperately trying to revive militancy.
India keenly participated in the FATF plenary held in Paris whichculminated on 21 February.In order to ease pressure on itself from the anti-terror body, Pakistan sentenced Hafiz Saeed for two terror crimes with the sentence to run concurrently a week before the plenary. While US expressed satisfaction, India questioned Pakistan’s intent by pointing out the timing of sentence and the fact that it was subject to appeal in the higher court. India also raised questions about Azhar Masood, Lakvi and Daud Ibrahim who continue to enjoy the patronage of Pak government and roam freely. India also exposed Pakistan’s lie that Azhar Masood along with his family was ‘missing’ by providing evidence that he was under Pakistan military’s safe custody at Bhawalpur. India’s another concern revolved around fake Indian currency racket being run by Pakistan.Pakistan’s prime interest in infusing fake currency is to promote espionage, destabilise Indian economy and terror financing. That’s why India continued to insist on complete compliance of the plan of action of the FATF. While Pakistan would aim to exit the grey list earliest through lobbying, India would continue to press for total compliance. Despite, FATF observing that Pakistan has largely addressed 14 of 27 action items, with varying levels of progress made on the rest of action plan, it decided to keep it on grey list till June 2020. Somewhere, the American influence was visible behind the scenes.
India will certainly be disappointed but Pakistan will take satisfaction from the fact that it has succeeded in avoiding being blacklisted. But one thing is certain that its game plan of lobbying at the cost of action has suffered a major setback and it has failed yet again. It will continue on the FATF grey list with its resultant repercussions. India can heave a sigh of relief for the time being since Pakistan is unlikely to openly support and promote cross border terror as long as the sword of FATF continues to hang over its head. However it would continue to fuel unrest and back terrorism clandestinely. India not only needs to keep its eyes and ears open but simultaneously up the diplomatic offensive against Pakistan to expose it to the international community.The risk of being blacklisted in June with consequential effect on wreaking havoc on its strained economy may restrain Pakistan to some extent but the prospect of continued support from China, Turkey and Malaysia along with tacit support from America will encourage it to yet again depend more on lobbying than action. In ultimate analysis, India will have to sort out cross border terror from Pakistan on its own.
(The author is a Jammu basedveteran, political commentator, columnist, security and strategic analyst.)
Brig Anil Gupta