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FATF’s conflict of interest

Updated March 14, 2019


FINANCE minister Asad Umar has done the right thing by writing to the Financial Action Task Force and asking for one of the co-chairs of the International Cooperation Review Group — an individual who is a serving officer of the Indian government — to be replaced.

Given the co-chair’s position, the question arises of a conflict of interest when it comes to dealings with Pakistan.

The ICRG is tasked with reviewing Pakistan’s progress on its implementation plan to move out of the grey list, and its report will play a crucial role in the June meetings of the global financial watchdog when Pakistan’s listing comes up for a decision.

Pakistan narrowly avoided being blacklisted in the February meetings of the global watchdog that monitors terror financing and money laundering. The meetings took place against the backdrop of the Pulwama attack and the subsequent rise in Pakistan-India tensions.

Departing from script, India made a spirited case for the immediate blacklisting of Pakistan at that meeting and found some backers around the table. Deft outreach efforts made by Pakistan’s delegation in Paris and senior government officials back in Islamabad saved the day.

But since then, India has continued with its campaign and used diplomatic channels to reach out to member countries of FATF, urging them to support a move to blacklist Pakistan in the June meetings. And all this even before the implementation of the action plan had begun.

Since the Indian government is pushing this agenda through diplomatic channels, it is hard to imagine how the co-chair of the ICRG, who in this case holds a controversial position, will follow a line other than the one adopted by his government.

The individual in question is a commissioner in the Enforcement Directorate of the Department of Revenue in India’s finance ministry, and as a mid-level bureaucrat it is unlikely that he will be able to exercise independent judgement in the case of Pakistan.

In any case, regardless of how he discharges his duties, the final outcome will necessarily suffer from a credibility deficit on account of his presence as co-chair, and give more fuel to those who are arguing that the entire exercise is an extension of regional geopolitics.

It is highly advisable for FATF to consider the request made by Mr Umar. This should be done with an eye to protecting the watchdog’s self-professed mission as an independent, technocratic body that stands above politics.

Many member countries of FATF have genuine concerns about the alleged presence of jihadi groups in Pakistan, but their own credibility is at stake when pressing these concerns upon the authorities in Islamabad.

Surely another individual can be found to serve in the co-chair’s position in the case of Pakistan, preferably from a state that does not made it known that it has an axe to grind with the country under review.

Published in Dawn, March 14th, 2019