Pakistani minister, officials lobbying in Beijing to get off FATF grey list

Islamabad's best chance is to get 'largely-compliant' rating on curbing terror financing.

A team of Pakistani officials is in Beijing to lobby for the country’s exit from the grey list of the global money-laundering watchdog, the Financial Action Task Force (FATF), amid the possibility that the move could entail voting. FATF meetings begin on January 21.

Islamabad’s best-case scenario is that if it does not get certification that it has done enough to curb money-laundering and terror financing, then it manages a ‘largely-compliant’ rating from the FATF on the basis of Islamabad’s implementation of 27 recommendations in its Action Plan and gets more time from the watchdog for full compliance.

“India is trying hard to move Pakistan to the ‘black list’ but expected support from China, Turkey and Malaysia would pour cold water on its efforts,” Pakistan government sources are quoted as saying in the Pakistan media. The Pakistani delegation is headed by Minister for Economic Affairs Division Hamad Azhar and has representatives from the National Counter Terrorism Authority (Nacta), Ministry of External Affairs, State Bank of Pakistan (SBP) the country’s central bank, the customs department, the Pakistan Home Ministry and its Financial Monitoring Unit (FMU).

Pakistan had sent a 650-page review report to the FATF on January 8 in reply to 150 questions raised by the FATF. Now the Pakistani delegation will present details about the steps taken from October 2019 to January 2020 keeping the recommendations of the FATF Action Plan in sight.

The FATF announced on October 18 last year that it would retain Pakistan on its ‘grey list’ for four months after which Pakistan might face action if it failed to make any significant progress on the inter-governmental body’s 27-point Action Plan. “The Pakistani delegation will provide details to the FATF about the cases registered so far against the banned outfits, sentences given to members of proscribed organizations, registration process of seminaries, steps taken against money laundering, dismantling of terror finance system and investigation into over 500 cases regarding transfer of funds to terror groups,” government sources in Pakistan were quoted as saying.

The Pakistani delegation would also provide details about the efforts to enter into a third party agreement with commercial banks to enforce Anti-Money Laundering and Combating Financing of Terrorism regulations in the country.

China has repeatedly said that punishing Pakistan would only impede the effective working of the FATF and has made it clear it will fight Pakistan’s penalization.

If the FATF feels the measures taken by Pakistan so far to curb terror financing are not sufficient and moves it to the so-called black list, Pakistan’s parlous economy will suffer a tremendous setback. Last month, against heavy odds, the country got the second tranche of the $6-billion Extended Fund Facility (EFF) from the International Monetary Fund (IMF), which warned that while Pakistan had done a lot to reform its economy, risks remain.

Amounting to USD 454 million, the loan took the reserves to USD 17.6 billion. The State Bank of Pakistan's (SBP) reserves were at USD 10.9 billion, while other banks' aggregated USD 6.7 billion.