Home Business Will the US pull Pakistan out of the FATF grey list?

Will the US pull Pakistan out of the FATF grey list?

Pakistan has urged the United States to get it off the grey list of the Financial Action Task Force (FATF), which monitors global money laundering and terror financing.

FATF

Pakistan has urged the United States to get it off the grey list of the Financial Action Task Force (FATF), which monitors global money laundering and terror financing.

Foreign Minister Shah Mehmood Qureshi said at a news briefing here on Friday night that Pakistan hoped the US would back its efforts to get it off the list at the FATF’s Beijing meeting next month.

“This meeting is very important for us as it leads to a plenary meeting in Paris in April where the world body will decide whether Pakistan remains on the list or is taken off,” he said.

The FATF has placed Pakistan on a list of countries that have failed to eradicate money laundering and where terrorists can still raise funds for their activities. If not removed off the list by April, Pakistan may move to a blacklist of countries that face severe economic sanctions, such as Iran.

Mr. Qureshi concluded his three-day visit to the United States on Friday after a series of meetings with key US lawmakers and officials, including Secretary of State Mike Pompeo and National Security Adviser Robert O’Brien. The foreign minister spent the week touring Iran, Saudi Arabia and the US on a diplomatic mission meant to defuse tensions between Washington and Tehran.

Read more: Pakistan Fighting On Two Fronts: With FATF & Against FATF

At his news briefing, Mr Qureshi also urged the US to review its travel advisories for Pakistan and encourage investments in the country. US travel advisories still present Pakistan as a country Americans should avoid travelling because of terrorism threats.

“Reviewing the advisory can boost tourism in Pakistan,” he said while reminding Washington that the United Nations had recently included Pakistan among 10 top tourism destinations. The United Nations and several European countries also had once again declared Islamabad as a safe city for diplomats and their families, he said while asking Washington to do the same.

Asked why the FATF’s Beijing meeting was important, Mr. Qureshi said that decisions taken in China’s capital would also impact the Force’s Paris plenary, which would decide whether Pakistan stayed in or was taken off the grey list.

“We want our American friends to tell us what’s their policy,” he said. “You share with us what measures you have taken or intend to.”

The minister acknowledged that removal from the FATF list could not happen overnight, but said that the US could enhance its engagements with Pakistan while waiting for the removal.

“Please consider how you can help improve Pakistan’s exports, increase our forex reserves, we need your guidance there too,” he said. “We also need your investment in the tourism industry.”

They said the Taliban must give this understanding that they will stop blood-letting and hostilities. This was not an easy task, but this too has happened. The Taliban are willing to end all hostilities

Mr. Qureshi noted that in his meetings with Prime Minister Imran Khan last year, US President Donald Trump had said that he wanted to see Pakistan off the FATF grey list. “So, we expect US officials to work for it now.”

The foreign minister said Islamabad had taken several concrete steps to meet FATF demands and the time had come for the US to fulfil President Trump’s pledge.

Mr. Qureshi recalled that when Secretary Pompeo came to Islamabad in 2018, “I told him that we are interested in resetting our bilateral relationship. Mr Pompeo said this could only be routed through Kabul.”

And “today, I told him we fulfilled our promise. The Taliban came to the table. Then you said the delegation should be authoritative and powerful, we did that,” he said.

“Then we were told the insurgents were holding two Western hostages. If they are released, it will create goodwill and break the stalemate. Our security establishment held 72 meetings and you saw two hostages reach home safely.”

When Pakistan got that done, “they said the Taliban must give this understanding that they will stop blood-letting and hostilities. This was not an easy task, but this too has happened. The Taliban are willing to end all hostilities,” Mr Qureshi said.

Read more: China Vows To Not Let US & India Politicize FATF To Damage Pakistan

“So, now my message for them is: this is a golden chance.

There’s no military solution to the Afghan conflict. All regional powers, including Iran, are supporting it. So, avail it and sign an agreement. That agreement will lead to an intra-Afghan dialogue. They should follow this pattern,” he said.

He reminded Washington that “Pakistan fulfilled your expectations. Now’ we too had some expectations, what have you done?”

Later, the foreign affairs minister arrived in Doha on an important visit.

Senior officers of the Qatari foreign ministry, Pakistan’s ambassador in Qatar Syed Ahsan Raza Shah and senior officials of the embassy received the foreign minister at the airport.

During the visit, the foreign minister would call on his Qatari counterpart Sheikh Mohammed bin Abdulrahman Al Thani and discuss bilateral and regional matters with him.

FATF greylist

The recent pronouncements by the Asia Pacific Group which regulates the FATF regime for Pakistan portray a number of regional money laundering and terrorism financing threats that confront Pakistan.

Read more: Pakistan’s compliance report to FATF: 113 Madrassas under complete administrative control

According to the APG, these threats pertain to the porous borders with Afghanistan, exposing Pakistan to incoming illicit proceeds from drug trafficking and funds to support terrorist groups operating within Pakistan and along its vulnerable borders.

Even though there is some acknowledgment of the fact, it is glossed over to some degree that Pakistan has had huge success in curbing terrorism. All the official and non-official figures show a sharp decline in terrorism, with terrorism on its lowest scale in the country when compared against data from previous years. However, this does not seem to translate into significant dividends when it comes to the FATF.

In fact, as with other previous assertions, the APG cites a significant number of UN-listed terrorist organizations operating in these border regions as a risk for outbound funds supporting terrorist activity in neighbouring countries, with the terror threats relating to the border regions with Afghanistan. Also, Pakistan’s significant diaspora of citizens working in other high terrorism financing regions in the Middle East and remitting funds creates an additional risk.

What the FATF does not indicate is the fact that, pragmatically speaking, it’s not an easy task to dismantle such long established networks. Kinetic operations have broken the back of terrorist outfits, and there will definitely be some time lag before these deeply entrenched groups in society can be weeded out. But, time is not on Pakistan’s side where the FATF is concerned.

This is not the only issue; capital flight associated with illicit proceeds from corruption and other high-risk predicate crimes, including tax evasion, are said to be continuing concerns, with the recovery of illicit funds mentioned as improvement but still not enough. In September 2018 Pakistan and the UK launched a ‘UK-Pakistan Partnership on Justice and Accountability’ to address money laundering issues and recover stolen assets held in the UK.

Read more: FATF War: Pakistan Fights for White list – India Lobby For Blacklist

However, the FATF does not really recommend pragmatic ways to address the problems of porous borders, recovery of stolen assets, and the movement of funds. What it does not seem to, or want to, recognize is that much of Pakistan’s economy is undocumented, which is typical of an agrarian based economy which gets inputs from remittances abroad, sent by many low scale workers who don’t want to send money through banking channels because it costs more, and exposes them to higher taxation in the remitting country and increased stringency in Pakistan.

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