By: Wali Ejaz Nekokara
Palpably, being on the Grey list can have several stark implications for Pakistan’s already tottering economy.
Pakistan will remain on the FATF grey list till February 2021. It has successfully complied with 21 points out of 27. Pakistan took considerable measures to fulfill the conditions stipulated by FATF including approval of various bills such as the United Nations Security Council Amendment 2020 and Anti-Terrorism Act amendment bill 2020. These Bills were about taking steps like travel bans and arms embargo on the entities and individuals blacklisted or designated by UN, seizure, and freezing of assets and imposition of fines and those who will facilitate militancy would be awarded a long term jail. United Nations Security Council’s resolution 1373 makes it mandatory for member states to introduce laws at the domestic level to counter terror financing. The main objective of FATF is to curb money laundering and terror financing. It would be pertinent to highlight the difference between money laundering and terror financing. Terror financing is akin to collecting funds to help terrorist organizations or terrible terror acts. In simple words, we can say that terror financing is a misuse of funds. On the other hand, in Money Laundering, the source of money is perceived as a crime.
Pakistan including Iran and Afghanistan is deemed as a part of the golden crescent (A term is used for specific areas of Asia famous for opium production and smuggling). Embarrassingly, it is also a well-known reality that the politician and many government officials are involved in illegal activities of Money Laundering in Pakistan by establishing offshore companies, drug smuggling and embezzlement in funds, bribery, and corruption. In India and Pakistan, the notorious tools of Hawala/Hundi are often applied for the scourge of Money laundering. This system of Hawala or Hundi is run by the culprits without moving the money. The illicit transfer of money (Hawala or Hundi) is banned in Pakistan and culprits are performing this nefarious act clandestinely. Astonishingly, around $15 billion’s worth of currency was transferred by Hundi and Hawala in 2015. Terrorist organizations need the money and money launderers and people involved in Terror Financing usually provide them the funds. In India and Pakistan HAWALA and HUNDI, both are common to assist terrorists or anti-peace activities.
Palpably, being on the Grey list can have several stark implications for Pakistan’s already tottering economy. Firstly, International institutions like IMF, World Bank, and Asian Development Bank can impose Economic sanctions. Secondly, Challenges for acquiring loans from International Financial institutions. Thirdly, a Decline in international trade is possible. Fourthly, a boycott by the International community. Fifthly, the Decline in Foreign Direct Investment because it is not good for the reputation of foreign companies to invest in a country that is known for its terrorist activities. Sixthly, the more troubling thing can be pushing Pakistan on Blacklist like North Korea and Iran. Seventhly, strict scrutiny of the money by the senior banks being transferred to and from Pakistan and eighthly Export, imports and remittances will be affected. In a nutshell, we can say that being on the grey list can make worse the already fragile economy of Pakistan.
A question arises, is barely compliance enough to come out of the grey list and to ward off the blacklist?
Bearing in mind the speculations about the politicization of FATF, it would be difficult to anticipate the way out of the grey list based on compliance.Deputy Director-General for policy planning of Chinese Ministry of Foreign affairs Mr. Yao Wen once said that “China doesn’t want politicization of FATF as some of the countries are vying for their political goals”. This statement cannot be taken lightly. International politics is one of the unavoidable factors in determining destiny of a country. US, UK, and European nations’ interests play important role in FATF. FATF is explicitly being used for pursuing the USA’s interests, the blacklisting of Iran and North Korea is a case in point. Moreover, the USA is a big financer of FATF; it further strengthens the USA’s position in FATF. As far as Pakistan is concerned, FATF’s decision of keeping Pakistan on the grey list doesn’t seem free of politics. The USA still needs Pakistan in Afghanistan that might be one of the reasons behind not blacklisting Pakistan. Since the US has a huge influence in FATF; it is difficult to augur that Pakistan will be removed from the grey list without satisfying the US. But history also suggests that after notching up political objectives the US hardly shows any responsible behavior towards her allies or facilitators. What surety do we have that after helping the US, Pakistan can get extrication from the grey list?
Pakistan has three options, first is to linger on the afghan issue for being politically relevant, as a result, Pakistan will remain on the grey list. Second is to keep pace or haste to help the USA in the withdrawal of forces, in corollary Pakistan can either be removed from the grey list or not. There is less surety in this owing to the unpredictable demeanor of the US towards facilitators. The third is to take the US in confidence and to sell his point of facilitating the peace process in Afghanistan for getting the attention of world powers. This is a useful option and Pakistan should go for this.
If we talk about India, its massive propaganda to blacklist Pakistan proved to be a wild goose chase. India makes no bones about dubbing Pakistan a hub of terrorism but this time India should be careful about herself. The US Department of Treasury Watchdog known as Financial Crimes Enforcement Network (FinCEN) has revealed a stark reality about the financial wrongdoings by India. At least 44 banks are reported to involve in money laundering of $1.53 billion through 3,201 illegal transactions. The pertinent report further maintains that Indian banks facilitated terrorists in India after US banks filed a set of Suspicious Activity Reports (SARs) against 44 Indian banks. More than 2 trillion dollars worth of transactions is identified by FinCEN in the period of 18 years (1999-2017). The transactions were flagged in more than 2100 reports by 90 financial institutions. International Consortium of Investigative Journalism (ICIJ) reports that the suspicious banks kept profiting from dangerous and influential players despite being fined by the US authorities due to the inability to stem the flow of black money. Now, FATF should abandon its approach to treating India as protégé and must put her on the grey list. If FATF overlooks the terror financing in India then it will be ample to question the neutrality and impartiality of FATF. FATF has to change the prevailing perception that it is a political organization that is serving major powers’ objectives.
The writer is a freelance columnist and graduated from the school of politic and international relations at QAU. He can be reached at [email protected]