WASHINGTON: Pakistan may find itself on the blacklist of a global financial watchdog if it does not prepare a comprehensive action plan to eradicate terrorist financing by June, official sources told Dawn.

The 37-nation Financial Action Task Force (FATF) held its plenary meeting in Paris last week where it placed Pakistan on a watchlist of the countries where terrorist outfits are still allowed to raise funds.

On Friday, the group issued an updated grey list, along with a statement announcing the decisions taken at the plenary session, and Pakistan was not on the list. Officials in Islamabad interpreted this as a “breather”, although it’s more of a technical detail.

The grey list identifies the “jurisdictions with strategic anti-money laundering/countering the financing of terrorism deficiencies for which they have developed an action plan with the FATF”. Pakistan has not yet worked out the proposed plan with the FATF and that’s why it’s not on the list.

The FATF carries out an in-depth study of the financial system of a country – known as “mutual evaluation” – as part of the process to avoid blacklisting. The next evaluation starts in April, which may take 18 months, and will be followed by another 12 months of analysis. A mutually agreed action plan for overcoming “strategic deficiencies” would become operative at the end of evaluation.

Between now and June, Pakistan will have to work out the details of the evaluation process with the FATF and a failure to do so could trigger another process, which may push Pakistan on the blacklist of wilful violators.

Usually, the FATF waits for a mutual evaluation report before starting the listing process but in Pakistan’s case, the group took an unprecedented step when it agreed to debate a US proposal, backed by Britain, France and Germany, to nominate Pakistan as a country having “strategic deficiencies” in “countering financing of terrorism”.

“The move was against the understanding given to Pakistan that Islamabad will be asked to work with the FATF on an action plan, before the listing process starts,” an official source told Dawn.

The Paris plenary held its first meeting on Pakistan on Feb 20 where China, Turkey and Saudi Arabia, which was representing the Gulf Cooperation Council (GCC) as it’s not a full member, opposed the move to place Pakistan on the watchlist. But the US pushed for an unprecedented second discussion on Pakistan, held on Feb 22.

By then, Washington had convinced Riyadh to give up its support to Pakistan in return for a full FATF membership. This left only two – China and Turkey – in the Pakistan camp, one less than the required number of three members to stall a move.

At this stage, the Chinese informed Islamabad that they were opting out as they did not want to “lose face by supporting a move that’s doomed to fail”, another official source told Dawn. “Pakistan appreciated the Chinese position and conveyed its gratitude to Turkey for continuing to support Islamabad against all odds,” the source added.

After the Feb 20 meeting, Foreign Minister Khawaja Asif sent out a celebratory tweet, saying that Pakistan had won a three-month reprieve.

Hours after the tweet, US State Department Spokesperson Hea­ther Nauert indicated at a news briefing in Washington that Islamabad’s celebrations were premature. She said the Paris plenary was not over yet and it would hold another meeting on Pakistan on Feb 22, as it did.

She also mentioned Hafiz Saeed and his activities while detailing US complaints against Pakistan and the sources that spoke to Dawn after the Feb 22 meeting said that indeed Hafiz Saeed and his “charities” were top on the list of the groups that the FATF wanted Pakistan to act against.

Pakistan did make some laws before the Paris meeting that would allow it to act against these groups but apparently that was not enough to convince the FATF.

Pakistan was first put on the FATF grey list in 2012 but was removed in 2015, after the FATF certified that Islamabad had done enough to counter terror financing.

Now, Pakistan will have to follow the same process that it did in 2015, starting with an action plan that Islamabad is required to submit in May. If the FATF approves the action plan in June, it will make a formal announcement about placing Pakistan on the grey list. Should Islamabad fail to submit an action plan, or if the FATF does not accept it, the group can place Pakistan on its black list, along with North Korea and Iran.

Published in Dawn, February 26th, 2018

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