ONE of Pakistan’s key challenges in 2019 will be to avoid being blacklisted by the Financial Action Task Force. Over the coming days, the government has to demonstrate compliance with 10 points of its ambitious plan to address deficiencies in counterterrorism financing. It then has until September to meet the remaining requirements to stay off FATF’s black list.
Scrambling efforts to prepare for the January review included the release of a terrorism-financing risk assessment jointly produced by Nacta and the FIA. The report identified the main sources of terrorism financing (foreign funding, drug trafficking, kidnapping for ransom, extortion, robbery and bank robberies) and will likely provide the basis for subsequent government actions.
Interestingly, charitable donations are not identified as a major source, despite FATF’s focus on this aspect, including recommendations in October by the Asia Pacific Group (APG), the regional FATF body managing the review, for Pakistan to crack down on non-profit organisations suspected of financing militant groups. Pakistan’s shortfalls in stemming terrorism financing were the drivers of its grey-listing in June. To avoid the black list, it has to demonstrate that it can identify terrorism-financing risks, clamp down on cash smuggling and other illegal financial transfers, and that law-enforcement agencies are coordinating to investigate and prosecute terrorism-financing activities in the widest possible sense.
Progress has been lumbering. In November, the APG raised questions about Pakistan’s efforts to date, including regarding the legal status of Lashkar-e-Taiba-linked Jamaatud Dawa and Falah-i-Insaniat Foundation, and efforts to identify individuals and entities linked to these groups, enforcement of anti-terrorism financing legislation, and which government body will do what.
Pakistan must own the FATF project.
These questions highlight the scale of the challenge. The requirements necessitate nothing less than clear legislation, a unified approach and intelligence sharing by law-enforcement, intelligence agencies and financial regulators, inter-provincial coordination and capacity building. These have been elusive, even during Pakistan’s decade-long struggle with domestic militancy. Moreover, questions persist about the seriousness of the state’s approach. How much can we realistically achieve by September?
Meanwhile, the government has also overlooked an essential element: public awareness. This is an important part of any regulatory regime, and will be a key factor in determining the efficacy of Pakistan’s counterterrorism-financing approach.
New laws and regulations must be explained through a public-awareness campaign to build legitimacy. It will undermine the state’s writ if it is perceived to be arbitrarily and sporadically enforcing new regulations, for example, with regard to the movement of cash. A public-awareness campaign can also help prevent the politicisation of efforts to meet FATF requirements; eg, linking grey-listing with political corruption and placing disproportionate blame on certain political actors ignores the fact that the key driver was terrorism-financing concerns. If new regulations are thought to be politicised, they will be weak and suspect.
It is also important for the government to acknowledge that the FATF grey-listing is widely perceived within Pakistan not only as a US pressure tactic applied at India’s behest with an eye to accelerate action against anti-India militant groups but also to deter foreign investment and ruin Pakistan’s standing on the global stage when CPEC is meant to take off. This narrative will affect public buy-in and possibly discourage enforcement of new measures by mid-level security officials and bureaucrats. Now that Pakistan has chosen to comply with FATF directives, it must own the project, rather than wave it as a banner of victimisation.
A public-awareness campaign should emphasise that countering terrorism financing is in Pakistan’s best interests, and key to improving the domestic and regional security situation. The challenge here will be to ensure that the campaign does not become subservient to well-established security narratives. Already, state discourse around terrorism financing is seeking to emphasise the foreign dimension of terror financing. Pushing this line threatens to discourage wider stakeholder buy-in.
Most importantly, the government must inform the public about its counterterrorism-financing initiatives to enable accountability. It is essential that new regulations — including enhanced requirements for disclosures of personal information to financial institutions — are not abused as a way to put pressure on civil society groups or political opponents or to conduct surveillance.
In the name of national security, there is already immense pressure on INGOs and grassroots activist movements. Only by being aware of new counterterrorism-financing regulations can groups who suspect these are being abused push back. Better accountability can only lead to stronger regulation.
The writer is a freelance journalist.
Published in Dawn, December 31st, 2018