New Delhi: Since June last year, Pakistan has been under tremendous global scrutiny over terror financing since it was placed under the ‘Grey List’ of nations by the watchdog, Financial Action Task Force. Pakistan was handed an October 2019 deadline to fix its performance on all parameters, failing which it would be put under the ‘Black List’.
On Friday, time runs out for the deadline and Pakistan’s performance will be reviewed by the 39 member states of the FATF, which includes both India and the United States. Yet, despite reports that Pakistan has not been fully compliant on most parameters, Pakistan may avoid being in the Black List after all.
The FATF is a global anti-money laundering watchdog that also turns its scanner to money laundering as a means to finance terror activities across the world. It places nations in three categories – White List, Black List and Grey List.
The ‘White List’ is a list of countries that comply with most of the FATF’s parameters and includes countries such as India and the US. The ‘Grey List’ is a list of nations identified as ‘high risk’ nations. On one hand, it includes conflict-ridden nations like Syria and Yemen, as well as nations like Pakistan, and on the other hand, it also includes nations that may be tax havens, such as Panama. A total of nine nations are on the ‘Grey List’. The ‘Black List’ only has 2 countries – North Korea and Iran.
Last week, the Asia/Pacific Group on Money Laundering (APG) report showed that Pakistan had fully complied with only one parameter, largely complied with nine, and partially complied with 26 of the 40 parameters. Media reports from France, where the FATF plenary is being held, suggested that Pakistan may remain in the ‘Grey List’ till February 2020.
On Friday, the FATF will announce whether Pakistan will remain in the Grey List or move further down to the Black List. Of the 39 voting members of the FATF, at least four are seen as Pakistani allies. China, perhaps Pakistan’s strongest ally, is currently the chair of the FATF. While nations like India and the US want Pakistan blacklisted, Pakistan has its fair share of friends in the body.
Former Indian Diplomat Vishnu Prakash said, “Pakistan has an all-weather ally, China, as the chair of the FATF. I think, with Chinese aid, they will be able to avoid the blacklisting.” Explaining the procedure further, Prakash said, “All Pakistan needs to do is make sure that it has three countries on its side. China, Malaysia and Turkey are already on its side and it’s also hoping that Saudi Arabia will block the bid to blacklist Pakistan.”
According to Prakash, three member states voting against a nation’s downgrading at the FATF works as an effective veto. Pakistan-based geopolitical strategist Qamar Cheema concurred and said, “Pakistan has worked hard to do well on all parameters. And we have also managed to get other countries on our side. We have enough and more countries that will block out any bid to downgrade Pakistan.”
The moment a nation gets put in the Black List, it invites immediate economic sanctions and punishment. “Borrowing will become difficult, non-banking financial institutions will come under financial scrutiny and bailouts and IMF packages will become harder to access,” Prakash added.
So a mid-way solution, some reports suggest, is putting Pakistan under an entirely new category – a ‘Dark Grey List’. This is a tier between Grey List and Black List. Prakash explained, “If Grey List means a nation is put under alert, Dark Grey would be like the final warning.”
Cheema said he was confident Pakistan was going to avoid the ‘Dark Grey List’ also. “Imran Khan has managed to effectively convey Pakistan’s position to the world. Pakistan will also avoid this Dark Grey List.”
Prakash, however, is not convinced. “Pakistan being included in the Dark Grey List is a much more a possibility than getting blacklisted. This halfway house will save China, Turkey and Malaysia from embarrassment as well as provide Pakistan yet another chance to get its house in order”.
According to Cheema, this is a temporary “pressure tactic” that will blow over soon. “In Pakistan, this is being seen as a means to fulfil the political agenda of the West. The Americans want to pressure Pakistan ahead of the Afghanistan peace talks. They know they need Pakistan, and therefore, they want to keep this as a bargaining chip. This will be over soon,” he said.
The FATF plenary session is currently underway in Paris, where Pakistan’s Economic Affairs Minister Hammad Azhar is leading the delegation that will present Pakistan’s case in front of the 39 member states. Measures taken by Pakistan to improve its performance on the 40 parameters of the FATF will be reviewed.