Serious concerns had been raised in the FATF’s February plenary chaired by President Xiangmin Liu of the People’s Republic of China. The plenary urged Pakistan to implement the recommended action plan by June 2020.

The statement released by the plenary states, “To date, Pakistan has largely addressed 14 of 27 action items, with varying levels of progress made on the rest of the action plan. The FATF strongly urges Pakistan to swiftly complete its full action plan by June 2020.”

Pakistan was formally put in FATF’s grey list in June 2018 citing ‘structural deficiencies’ resulting in failure to target terrorism financing and money laundering. The international watchdog, currently comprising 37 members, instructed Pakistan to fulfill 27 points plan to curb money laundering and terror financing with the support of a robust legal framework.

The plan of action was supposed to be delivered by the end of 2019. Due to the Covid-19 pandemic, the deadline for Pakistan to submit its implementation report was extended till July 2020. The progress report has been submitted to the FATF’s regional body Asia Pacific Group (APG) which is going to be scrutinized in the FATF’s next session expected to be held in September.

Pakistan needs 15-16 votes to exit the grey list. In the last plenary held in February 2020, United States, China, Turkey and Malaysia supported Pakistan and wanted to get it off the grey list. Therefore, Pakistan has to convince 12 more members prior to the upcoming session to achieve this target.

The recent bills passed in the National Assembly are part of the effort to get Pakistan out of the FATF’s grey list. The prominent features of the bills namely The Anti-terrorism (Amendment) Bill, 2020, and The United Nations (Security Council) (Amendment) Bill, 2020, include arms embargo, travel ban, and freezing and confiscation of assets of organisations and individuals designated on the Sanction Lists 1267 and 1373 of United Nations. Hefty fine and long terms in jail are also proposed for those supporting terrorism or militancy.

Pakistan Institute of Peace Studies (PIPS) director Amir Rana thinks Pakistan should not have high hopes in this regard considering the track record of FATF’s previous sessions.

In fact, Rana says that Pakistan has been struggling to achieve the compliance targets that include anti-money laundering and terror financing, prosecuting and penalizing terror financing, transparency and secrecy in financial institutions, and implementing an effective national mechanism to check the illegal funding of terrorist outfits.

With these efforts, Pakistan has established a monetary mechanism to curb money laundering and terror financing. Sindh Bank vice president Abbas Ali Ghurki says that the possibility for any proscribed individual or entity to fund an illegal activity by electronic means has been greatly reduced.

“A lot has been done by the state in the last six months. For instance, Anti-Terrorist Courts (ATCs) have convicted more than 150 criminals, who were involved in terrorist activities and money laundering. This includes the senior leadership of Jamaat-ud-Dawa (JUD). Though, these efforts have brought some goodwill at international level, these are not enough, at this stage, to avoid grey list”, he adds, “Certainly, last six months’ progress and the new legislation have done enough to evade black list; however, it appears that the FATF would keep Pakistan in the grey list for another short period to observe the implementation of latest bills.”

However, Professor Dr Hassan Askari Rizvi has high hopes. “We have not only seized criminals but convicted them as well. The world has recognised the seriousness of our state; and the space for individuals and entities involved in any kind of terrorist activities is rapidly shrinking”, he says.

Dr Rizvi believes that recent bills have provided Pakistan with a good diplomatic opportunity to persuade the FATF members. “Albeit, effective diplomatic determinations are required as Pakistan is running out of time”, he adds.

In the past, some security analysts have been consistently criticising a diplomatic approach that did not turn the tide in Pakistan’s favour. Rana has little hope for any drastic transformation at the diplomatic front in the near future. “It is already too late to introduce new legislations that are significant and necessary to convince the FATF about our seriousness and commitment to fulfill the given action plan”, he says.

“However, effective diplomacy can earn us some good shrugs,” he says.

In the previous session, the FATF expressed a measure of satisfaction with Pakistan’s political commitment and the progress in a number of areas including risk-based supervision and pursuing domestic and international cooperation to identify cash couriers.

It is due to some amendments in laws introduced during the last two years. New ordinances have also been introduced to fulfill the tasks identified in the ‘Action Plan’.

The legislative measures include Foreign Exchange Regulation Act (Amendment) Bill 2020; Anti-Money Laundering (Amendment) Bill, 2019; Mutual Legal Assistance (Criminal Matters) Act (MLA) 2020; Benami Transactions (Prohibition) Rules 2019 and Benami Transactions Ordinance 2019; NACTA Amendment Ordinance 2019; and Amendments to the ATA 1997 (2020).

With these efforts, Pakistan has established a monetary mechanism to curb money laundering and terror financing. Sindh Bank vice president Abbas Ali Ghurki says that the possibility for any proscribed individual or entity to fund an illegal activity by electronic means has been greatly reduced.

“State Bank of Pakistan is also very vigilant and imposes heavy penalties if a bank is seen ignoring the recommended monetary mechanism”, he states.

The FATF has been consistently urging Pakistan to take action against illegal Money or Value Transfer Services (MVTS). Ghurki believes that the fresh bills would be a tremendous boost to curtailing the remaining loopholes.

The other major concern consistently highlighted by the FATF is the lack of effective national mechanism to check the illegal funding of terrorist outfits and coordination between provincial and federal authorities cooperating on enforcement cases. Rana believes that the latest bills have addressed the recommended structural deficiencies but holds that getting out of the grey list depends largely on satisfactory implementation.

The author is a staff member. He can be reached at warraichshehryar@gmail.com