Pakistan fails to check terror funding, retained on 'Grey List' of FATF

The Financial Action Task Force (FATF) on Thursday gave an extension of four months to Pakistan to act against organisations involved in terror financing. 

Maintaining Pakistan in the Grey List, the task force said “All deadlines given to Pakistan to check terror funding ended, it failed to complete its action plan in line with an agreed timeline and failed to check terror funding risks emanating from its jurisdiction. FATF warns Pakistan of action if it fails to prosecute, penalise on terror funding acts by June.”

That group also stated that Pakistan largely addressed 14 of 27 action items. The decision has been taken at the Financial Action Task Force's plenary in Paris. 

In a victory for Indian diplomatic channel, the plenary noted that Pakistan addressed only a few of the 27 tasks given to it in controlling funding to terror groups like the Lashkar-e-Taiba (LeT), the Jaish-e-Mohammad (JeM) and the Hizbul Mujahideen, which are responsible for a series of attacks in India. India has been maintaining that Pakistan extends regular support to terror groups like the LeT, the JeM and the Hizbul Mujahideen, whose prime target is India, and has urged the FATF to take action against Islamabad. 

With Pakistan's continuation in the 'Grey List', it will be difficult for the country to get financial aid from the IMF, the World Bank, the ADB and the European Union, thus further enhancing problems for the nation which is in a precarious economic situation, making Prime Minister Imran Khan's term even more difficult. 

If Pakistan fails to comply with the FATF directive, there is every possibility that the global body may put the country in the 'Black List' along with North Korea and Iran.

Pakistan is believed to have received strong backing from Malaysia but failed to impress western nations due to India's consistent efforts by providing materials and evidence on Pakistan's inaction to check funding to terror groups operating from its soil.

The logo of the FATF (the Financial Action Task Force) is seen during a news conference after a plenary session at the OECD Headquarters in Paris

The FATF meeting, from February 16 to 21, was held a week after an anti-terrorism court in Pakistan sentenced Hafiz Saeed, the mastermind of the 2008 Mumbai attack and founder of the LeT, to 11 years in two terror financing cases.

The Pakistani court's judgment came ostensibly to please the FATF and western countries so that the country can exit the 'Grey List'. Saeed, a UN designated terrorist on whom the US has placed a USD 10 million bounty, was arrested on July 17, 2019, in the terror financing cases.

Pakistan has been under the FATF’s scanner since 2018, when it was put on the greylist for terror financing and money laundering risks, after an assessment of its financial system and law enforcement mechanisms.  It is theoretically possible that Pakistan is moved out of the greylist. But that would require the votes of at least 15 of the FATF’s 36 voting members.