THE Financial Action Task Force (FATF) is all set to take up the question of whether Pakistan is complying with international commitments to prevent its financial system from being used by groups that have been designated by the United Nations as terrorist entities, and early indications are that it is going to be a bumpy ride. This is a long running story, going back at least eight years and the country has been scraping past the successive reviews by offering up one ‘action plan’ after another, but failing to deliver on its commitments.
For more background, I can point readers to my piece in February last year, titled ‘To ban or not to ban’. Back then the government had placed Hafiz Saeed, one of the main characters in the story since his name is on the United Nations list of designated terrorists along with his deputy and the Lashkar-e-Taiba that he founded, the Falah-i-Insaniyat (FiF), and the Jamaatud Dawa (JuD) that he now heads, which are listed as “an alias of the LeT”, under house arrest.
The move was widely seen as an attempt to come into partial compliance with the requirements of FATF. The actual requirements go much further, requiring an asset freeze and a ban on all organisations headed by those who are listed by the UN as terrorists, but any attempts to ban the JuD and the FiF meets with stiff resistance within the country, because they are engaged in charity work.
The country went through a compliance review in June 2017 and committed to taking sterner action to enforce international obligations in order to safeguard its financial system from the possibility of being used by designated individuals and entities. The risks associated with this were made clear the next month after the review.
A long story may be drawing to some sort of close at last. The ordinance just passed will now need parliamentary ratification.
In August, the country’s largest bank was slapped with a hefty fine of $225 million by regulators in the US, for allegedly having handled funds belonging to terrorists. There was no link between that action by the state regulator and the ongoing discussions with FATF, but it was a clear sign of the stakes involved. The fine was not large enough to do serious damage to the bank, but future actions could be.
In November 2017, a plenary session of FATF was held in Buenos Aires, Argentina. Pakistan was asked to submit a compliance report, detailing what actions had been taken to deliver on its commitments. About two weeks later, in a meeting of the National Security Committee (NSC) chaired by the prime minister and attended by all senior ministers of the cabinet, as well as the army chief and the chiefs of all the other forces and the chairman of the joint chiefs of staff committee, among other “senior civil and military officials”, the matter of complying with FATF regulations again came up but further action was apparently shot down.
“While reviewing the progress made with respect to Pakistan’s commitment under the Financial Action Task Force (FATF) framework, the Committee observed that Pakistan needed to convey its position and achievements comprehensively and clearly to the FATF” said a press release following the meeting. The language used in the release is vague and does not tell us whether or not a decision was made to follow through on proscribing all organisations that have been designated by the UN as terrorist groups.
A week later, the Lahore High Court ordered the release of Hafiz Saeed from house arrest, turning down a petition from the Punjab government to extend his detention. The government was simply taking one extension after another without bringing any charges, or supplying concrete reasons for the detention. Almost immediately, the United States formally asked Pakistan to rearrest Saeed, whose release made headlines around the world.
Shortly after that, news was leaked to Reuters that the government was planning to earnestly proscribe the designated organisations, and seize all their assets. Then on Feb 2, in another meeting of the NSC, the matter of proscribing organisations designated by the UN was discussed again.
“The committee expressed satisfaction over the objectives achieved so far and directed the ministries concerned to complete the few outstanding actions at the earliest”, the statement released following the meeting read. It pointed out that some countries were working to use FATF to pressure Pakistan, and “expressed its hope that the FATF will not be politicised by a few countries”.
The key words this time are “complete the few outstanding actions”. Less than a fortnight later, a presidential ordinance was issued which amended the Anti-Terrorism Act, 1997, to say that all groups and individuals designated as terrorists by the United Nations will automatically be banned in Pakistan. A simple notification from the interior ministry usually suffices to proscribe a group or individual, but such notifications are subject to a stay order from the courts.
The extraordinary step taken through the ordinance means that in future if the name of a Pakistani individual or entity is designated by the UN as a terrorist, it will trigger an automatic proscription here in Pakistan.
A long story may be drawing to some sort of close at last. The ordinance just passed will now need parliamentary ratification within 120 days to become permanent. And after that comes the hard part of actually acting upon the decision. Some indications show that this might already be happening. Reports carried by the paper say operations of the Hudaibia madressah on Chakra Road, Rawalpindi, as well as four dispensaries in the same vicinity have been taken over by the government.
It looks unlikely that Pakistan will drop back down to the ‘grey list’ in the forthcoming FATF meeting, because decisions there are made through consensus and it only takes a few countries to object to such action for it to be dropped. If recent moves are anything to go by, it appears some wheels have finally started to turn.
The writer is a member of staff.
Published in Dawn, February 15th, 2018