It appears that Financial Action Task Force (FATF) is taking strong actions as it decides to add UAE to its grey list. Moreover, it refuses to remove Pakistan from the grey list despite Pakistan making significant progress.
On Friday, the Paris-based watchdog concluded its sixth plenary session where it decided to keep Pakistan on the grey list. FATF acknowledged the “significant progress” made by Pakistan in completing the required action items.
“Since June 2018, when Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies, Pakistan’s continued political commitment has led to significant progress across a comprehensive CFT action plan,” the FATF statement said.
Read more: FATF and its contradictory policies
However, FATF maintained that Pakistan should continue to make progress to address, as soon as possible, the one remaining item by continuing to pursue complex money laundering investigations and prosecutions. To clarify, Pakistan has addressed 6 out of 7 items in the Money Laundering Action Plan. Furthermore, it addressed 26 out of 27 items in the Terror Financing Action Plan.
Pakistan's completion of FATF technical parameters shall be acknowledged soon, despite challenges.
Our fight against ML & TF continues with an unwavering national resolve. We wage war on these activities not just for global compliances but first & foremost for our own sake.
— Hammad Azhar (@Hammad_Azhar) March 4, 2022
UAE added to FATF grey list
In a bold move, FATF added UAE to the grey list too. UAE now joins 22 other countries including Pakistan with inadequate controls of terrorism financing.
“Following review, the FATF now also identifies the United Arab Emirates [in the grey list],” the statement said. This of course is a major blow to UAE as countries on the grey list risk reputational damage. Moreover, UAE prides itself as a business and investment hub, especially through Dubai.
Read more: Germany, Saudi & UAE to join CPEC
However, FATF’s decision comes after years of pressure on the UAE from Western governments and transparency advocates to limit its heavy reliance on cash transactions and crackdown on illicit financial flows.
Just as expected, Pakistan to remain in FATF gray list, until next review in June 2022.
Meanwhile, UAE has also been added to the FATF gray list for not being able to set up a 'monitoring mechanism'.
— OSINT Insider (@OSINT_Insider) March 5, 2022
Following the announcement, the UAE said it would work closely with the FATF to remedy the identified areas of improvement.
“On this basis, the UAE will continue its ongoing efforts to identify, disrupt and punish criminals and illicit financial networks in line with FATF’s findings,” the UAE’s Executive Office of Anti-Money Laundering and Countering the Financing of Terrorism said.
Consequences?
Needless to say, FATF’s decision of adding UAE to the grey list and also retaining Pakistan has raised some serious questions. Important to note, Pakistan has taken great lengths to comply with FATF’s action plans, a feat recognized by FATF itself. On the other hand, UAE has long garnered a reputation for the ease of moving large sums of cash in and out of the nation.
However, the decision comes at a time when the Western world is clamping down on Russia due to its military action in Ukraine. Interestingly, countries refusing to take a firm anti-Russia stance are facing consequences from the West. Important to note, both UAE and Pakistan have maintained a neutral position.
The UAE presidential adviser Anwar Gargash said the Gulf state “believes that taking sides would only lead to more violence”. UAE’s priority was to “encourage all parties to resort to diplomatic action”.
Anwar Gargash, the diplomatic adviser to the #UAE president, says that the UAE encourages a political settlement to the #Ukraine conflict.https://t.co/oUIq9h3Lsu
— Al Arabiya English (@AlArabiya_Eng) February 27, 2022
Similarly, Pakistan also decided to not take sides in the Russia-Ukraine conflict. Pakistan even abstained from voting in the recent United Nations General Assembly (UNGA) resolution demanding Russia withdraw from Ukraine.
The countries’ decision to not take sides has certainly ruffled feathers in the West and therefore it is resulting in severe consequences.
Interestingly, India has come under fire too. While India may not be on FATF’s list (despite its questionable and internationally recognized illicit financial activities), it too abstained from directly condemning Russia. Of course, the move did not go unnoticed by the US. For this, US President Joe Biden is considering putting sanctions on India for its S-400 deal with Russia. Important to note, India has a history of purchasing military equipment from Russia. However, the US is deciding to take action now.
Read more: ‘India to protect its national interest in S-400 deal’, says Foreign Minister
Naureen Salim is a Research Analyst and Sub-Editor at GVS. The views expressed in the article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.