On an issue that may potentially leave Pakistani citizens and businesses poorer in years to come, the federal government is doing a poor job communicating. What is discussed in the quarterly meetings of the Financial Action Task Force (FATF) – that is, issues on anti-money-laundering (AML) and countering-financing-of-terrorism (CFT) – may be secretive. But that should not stop the government from releasing to the public an unequivocal and realistic assessment of where things stand and what to expect.
It isn’t clear how Pakistan is really faring in the court of FATF, in the context of the critical final review that is due in October, on whether Pakistan will be moved out of the grey list or downgraded to the black list. For domestic audience, the government projects an optimistic scenario in days before and during a FATF session, only to be contradicted a few days later by reports of adverse reviews.
The pattern repeated itself last week, with initial reports of “all is well” followed swiftly by reports to the contrary. On June 21, FATF released a public statement that noted continuing deficiencies in Pakistan’s AML and CFT regimes on a broad range of issues linked to coordination, compliance, enforcement and prosecution. The statement ended thus:
“The FATF expresses concern that not only did Pakistan fail to complete its action plan items with January deadlines, it also failed to complete its action plan items due May 2019. The FATF strongly urges Pakistan to swiftly complete its action plan by October 2019 when the last set of action plan items are set to expire. Otherwise, the FATF will decide the next step at that time for insufficient progress.”
It can be argued that FATF is asking Pakistan to do too much in too little time – ostensibly under pressure from the US and India. The issues in question are sensitive in nature and threaten the internal stability of Pakistan if they are not handled properly. It is practically difficult to suddenly disrupt legacy infrastructure that took decades in the making. Sadly, it is what it is. The noose is not loose yet.
With only a few months left until October, it will be a Herculean task for the relevant authorities to produce results that FATF finds to its satisfaction. At this stage, the best that Pakistan can hope for is to be allowed to stay on the grey list. That will require sustained diplomatic support from friendly countries, both longstanding ones (China, Turkey and Gulf states) and sympathizers ones (Malaysia, Indonesia, EU members, etc.).
Meanwhile, news reports indicate that India lobbied FATF members to black-list Pakistan (prematurely) at the Orlando plenary last week. Thankfully, it didn’t work. Some analysts are warning India from targeting Pakistan further, as India’s hardliner stance will politicize FATF and put off neutral members who feel that the grey-list allows them the leverage over Pakistan on resolving the deficiencies. Along with making progress on technical issues, Pakistan must highlight the Indian bias, to stave off any October surprise.
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