Pakistan has escaped the hangman’s noose in the Financial Action Task Force (FATF) for now, the noose being inclusion in the “black list” thanks to opposition from China, Turkey and Malaysia. So Pakistan remains in the “grey list” for now, but this could change as early as October if Islamabad fails to show progress on 27 indicators covering terrorist financing and money laundering. These indicators formed part of the FATF action plan given to Pakistan in June last year, which was reviewed at a meeting of the body in Orlando, Florida this week.
The FATF found no clarity on key issues including the reported $7 million given by the Pakistani federal and provincial governments to maintain schools, madrasas and clinics originally belonging to the Lashkar-e-Toiba and its front the Jamaat-ud-Dawa, the Jaish-e-Mohammad and its front Falah Insaniyat.
Questions were also raised about why Lashkar and Jaish terrorists were not arrested under terrorism laws, instead they were held under the Maintenance of Public Order Act which requires their release after 60 days.
Islamabad has three months to get its act together and show credible movement on the action plan. In public, Pakistani diplomats claimed the day’s development was a victory but ever since China lifted the block in the UN Security Council on the listing of Jaish chief Masood Azhar as a terrorist, there could be growing concerns over Beijing’s future inclinations.
Beijing’s decision to lift its “technical hold” on Masood Azhar at the UNSC would not have come as a surprise. But it also indicated Beijing saw no purpose in continuing to back its “Iron brother” on Masood Azhar, when it was internationally isolated on the issue. The same could happen in October if Islamabad fails to deliver on the action plan.
Further, India who is the co-chair of the Asia-Pacific Group to monitor compliance by Pakistan, has mounted increasing pressure on Pakistan to act against terror elements operating from its soil. With its fate hanging in the balance, Islamabad will need to take some concrete measures as it cannot afford being pushed into the FATF black list. That would mean even more downgrading by the IMF, World Bank and ADB besides reduction in risk ratings by Moody’s among other agencies. It could spell collapse of the Pakistani economy.