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Insights into Editorial: Black and grey: On terror funding and Pakistan

Insights into Editorial: Black and grey: On terror funding and Pakistan



The deliberations, in Beijing, of the Asia-Pacific joint group of the global watchdog on terror financing and money laundering, the Financial Action Task Force (FATF), gave Pakistan some encouraging news: that it had progressed in its efforts to avoid a blacklisting.

A final decision will be taken at a plenary meeting of the body, expected in Paris next month: in keeping Pakistan on the current “grey list”, downgrading it to a “black list”, or letting it off altogether for the moment.

About Financial Action Task Force (FATF):

FATF is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering.

In 2001 its mandate expanded to include terrorism financing.

The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. 

The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

Pakistan has placed in grey list in 2018:

The 39-member body had determined that Pakistan was to be placed on the grey list in 2018, and presented it a 27-point list of actions.

These included freezing the funds of UN Security Council entities such as 26/11 mastermind Hafiz Saeed and the LeT, the Jaish-e-Mohammed (JeM) and other Taliban-affiliated groups.

The actions entailed a sustained effort to bring legal action against these groups, and also called for changes to Pakistani law in line with global standards for measures against money laundering and financing terrorism.

Unlike in October 2019, when Pakistan had completed five points, the Beijing meeting has cleared it on 14 points.

India want more scrutiny on removing Pakistan’s Grey list:

While Pakistan’s progress will come as a disappointment to India, it wants more scrutiny of Pakistan’s support to terror groups lest Islamabad feels it has been let off the hook there are a few points to consider.

  • First, the grey listing is not new. Pakistan was placed on it in 2012, and was removed in 2015 after it passed a National Action Plan to deal with terrorism following the 2014 Peshawar School massacre. It was also placed under severe restrictions in the years 2008-2012, after the Mumbai attack.
  • Second, this last grey list period has already seen some Indian demands met, including the chargesheeting of Hafiz Saeed for terror financing, and the addition of JeM chief Masood Azhar to the UNSC 1267 list.
  • Finally, although the FATF is a technical organisation, there is no doubting that geopolitics and bilateral deals play a part in deciding outcomes.

Why Softer Tone on Pakistan?

Geopolitics and bilateral deals play a role in deciding outcomes.

Pakistan’s role in ensuring Taliban talks are brought to a successful conclusion soon may have weighed with the U.S. and its allies in the grouping.

With China in the President’s Chair, and the backing of Turkey and Malaysia, Pakistan could escape being blacklisted in any case.

‘Grey List’ by the FATF on Pakistan in June 2018:

The FATF is backed by the UN Security Council passed resolutions which made its recommendations binding and in case of deficiencies, sanctions could be imposed.

In the Beijing meeting, Pakistan provided a list of its action taken to comply with the FATF diktat.

Pakistan was placed on the ‘Grey List’ by the FATF in June 2018 and was given a plan of action to complete it by October 2019 or face the risk of being placed on the blacklist along with Iran and North Korea.

The FATF currently has 35 members and two regional organisations — the European Commission and Gulf Cooperation Council.

India is a member of the FATF consultations and its Asia Pacific Group and was represented in the meeting by a team of officials from the ministries of Home, External Affairs and Finance.

However, FATF needs to scrutinise in an unbiased manner:

The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally. 

In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.

The FATF has developed a series of Recommendations that are recognised as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction.

They form the basis for a co-ordinated response to these threats to the integrity of the financial system and help ensure a level playing field.


New Delhi must study the politics behind Pakistan’s FATF “progress”.

Officials have suggested that Pakistan’s role in ensuring Taliban talks are brought to a successful conclusion soon may have weighed with the U.S. and its allies in the grouping.

India’s recent troubles on the international stage, including the UNSC where China has been allowed to raise the Kashmir issue twice in five months, after nearly five decades, may also be a reason its objections at the Beijing discussions were not considered as carefully as in the past.

Prime Minister Narendra Modi also asserted that the ‘New India’s’ ideology is young and disciplined and that is why India conducted surgical and airstrikes on Pakistan by entering their soil to fight the sponsors of terrorism.