KARACHI: The BRICS countries, following the summit in Xiamen, have committed to intensifying their cooperation against terror financing and money laundering, within the framework established by the United Nations, specifically the Financial Action Task Force (FATF).

“We call for swift and effective implementation of relevant UNSC Resolutions and the FATF International Standards worldwide. We seek to intensify our cooperation in FATF and FATF-style regional bodies (FSRBs). We recall the responsibility of all states to prevent financing of terrorist networks and terrorist actions from their territories.”

The “relevant UNSC resolutions” referred to in the statement includes UNSC 1267, which lists all those groups, entities and individuals that have been designated as terrorists by the United Nations Security Council. A large number of groups and individuals based in Pakistan, as well as the aliases used by them, are listed in that resolution.

The statement makes repeated mention of terror financing as an area of concern where the signatory countries will cooperate in the future. It calls for “blocking sources of financing terrorism” as well as to “tackle all sources, techniques and channels of terrorist financing.”

Pakistan has been struggling since 2015 to get a clean bill of health for its financial system following the removal of the country’s name from the so-called FATF “black list”, or list of countries whose financial system is vulnerable to being used for purposes of terror financing.

More recently, banks have found their foreign operations coming under increasing scrutiny by global regulatory authorities, as well as becoming the target of enforcement actions, due to vulnerabilities to terror financing.

“We have to be extremely careful,” says a senior source in the world of banking who has intimate familiarity with the matter. “It’s like a minefield out there. You have to be very careful as you navigate your country and your financial system through this”.

He adds that the requirements of the FATF are applicable to all countries, not only Pakistan, and the need to bring one’s financial system into compliance with global guidelines is becoming increasingly urgent because the costs of lack of compliance could well be rising, and are also being refracted through the prism of bilateral and regional relations that every country has with others.

Pakistan has struggled for more than a decade to come into proper compliance with FATF guidelines. A law against money laundering and terror financing has been passed, as well as strengthening the SECP to pursue cases of terror financing. The State Bank has updated its guidelines for banks to detect and prevent terrorist funds and money laundering. But Pakistan’s track record of fully implementing UN Security Council Resolution 1267 remains under review by the FATF.

Published in Dawn, September 6th, 2017