Pakistan likely to exit FATF grey list this week after 4 years of scrutiny on terror finan...

Pakistan likely to exit FATF grey list this week after 4 years of scrutiny on terror financing

New Delhi is closely monitoring the FATF decision as a reprieve for Pakistan reflects improvement in the country’s ties with Washington

Pakistan is expected to be taken off the Financial Action Task Force grey list at the global watchdog body’s plenary session in Paris this week, although it will be asked to update members on its actions to counter terror financing and money laundering on a regular basis, in a decision that India will monitor closely.

The final decision on Pakistan, which has faced stringent financial sanctions and difficulties in availing international loans as a result of the FATF grey list, or “jurisdictions under increased monitoring” list since February 2018, will be announced at the end of the two-day session on October 20-21.

Minister of State for Foreign Affairs Hina Rabbani Khar landed in Paris on Tuesday to lead the Pakistani delegation and to iron out any last-minute wrinkles. A reprieve from the grey list will come as a major relief for Pakistan that is in the midst of an economic crisis, and is believed to also reflect an improvement in ties between Islamabad and Washington, officials said.

In Islamabad, the Dawn newspaper reported that Pakistani officials believed that the government’s “strenuous efforts” and “a smooth and successful visit” on-site by an FATF delegation to Islamabad and Lahore last month had ensured a favourable outcome at the plenary session this week.

Scrutiny to continue

However sources said that even after Pakistan is cleared to exit the grey list, it will be subject to continued scrutiny by the FATF, and will need to regularly report on its actions to continue the steps it has taken on Anti Money Laundering and Combating the Financing of Terrorism and (AML/CFT).

While New Delhi will keep a close eye on those actions, the government will also face a scrutiny of India’s record on AML/CFT with a periodic Mutual Evaluation Report (MER) process for India beginning in 2023.

In addition to the Pakistan question, during this plenary, the FATF is expected to take up China’s follow up of its evaluations, as well as Western proposals to suspend Russia from the FATF participation due to the war in Ukraine,.

It will also decide whether to move Myanmar, which is on the grey list, to the black list, or “High-Risk Jurisdictions subject to a Call for Action”, which includes Iran and North Korea.

Improvement in U.S.-Pakistan ties

The timing of the progress in Pakistan’s grey-list exit process is also being chalked up to a sudden improvement in ties between the government in Pakistan and the Biden administration in the U. S. after the exit of Prime Minister Imran Khan and the entry of Shehbaz Sharif.

In contrast to the previous year, when Mr. Biden made no contact with Mr. Khan, the U.S. President met Mr. Sharif at a reception in September in New York, and Foreign Minister Bilawal Bhutto was invited to Washington as well, even as the U. S. has restarted support for Pakistan’s F-16 programme.

In particular, an official pointed to cooperation between the U. S. and Pakistan in Afghanistan, which reportedly led to the killing of al-Qaeda chief Ayman al-Zawahiri in Kabul in a U. S. drone attack, and the subsequent visit of Pakistan Army chief General Qamar Javed Bajwa to the Pentagon, where he received the “honour cordon”.

“It is hard to imagine this would be possible unless Pakistan also had some assurance of support at the FATF from the U. S.,” the official said.

As a result, in June this year, the FATF had declared that Pakistan’s tasks on a 34-point checklist, including the prosecution of UN Security Council-designated terrorists, shutting down sources of funds for terror groups such as al-Qaeda, the Lashkar-e-Taiba and the Jaish-e-Mohammed, and amending terror and money laundering laws to match international requirements, had been “substantially completed” and warranted an “on-site” visit, which was completed on September 2.

As a part of those actions, Pakistan had provided “documentary evidence” of it efforts to seize funds and properties belonging to designated terror organisations, and of convictions of terror chiefs such as Mumbai 26/11 accused Hafiz Saeed, Zaki Ur Rahman Lakhvi and Sajid Mir.

However, many like Masood Azhar were not tracked down, and New Delhi has repeatedly protested against what it calls Pakistan’s subterfuge in actions against state-supported terrorist groups, including the fact that most of them have only been charged with minor terror financing cases, and not for carrying out terror attacks in India, including the Parliament attack, the 26/11 and 7/7 bombings, and the terror strikes on military targets in Pathankot and Pulwama, among others.

In its submissions, Pakistan had also said that Masood Azhar had not been traced in Pakistan, and was believed to be in Afghanistan, a claim India disbelieves and the Taliban regime in Kabul denied.

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