More effective FATF

Former US Secretary of State Madeleine Albright once called Pakistan an ‘international migraine’. The failure to fulfil six key obligations of the Financial Action Task Force (FATF) only indicates Islamabad’s lack of commitment in the fight against money laundering and terror financing. Terror groups operating from its soil continue to be provided immunity. The virtual plenary of the FATF from October 21 to 23 is likely to retain the country on its grey list. However, if the adverse economic ramifications the tag entails have not pushed Pakistan to mend its ways till now, there is little hope that the desired global standards would be met in the future. FATF’s ability to secure concrete results is under the scanner.

Pakistan has been repeatedly red-flagged on issues of terror financing and for not acting against proscribed persons and entities, but to no avail. The failed mandates include action against all UN-designated terrorists and the sudden disappearance of the names of more than 4,000 terrorists from the original list of 7,600. Given the geo-political complexities involved, any switch to the black list, with stringent restrictions, is difficult. Arming FATF with powers to impose severe sanctions under the grey list could be a plausible option in a country like Pakistan, which lacks the will to implement and refuses to act despite repeated assurances. New Delhi needs to take keen interest as the international watchdog undertakes the process to increase its effectiveness by reviewing the methodology of risk-based assessment. Under the proposed approach, critical failing in even one criterion can lead to black listing.

After prematurely taking Pakistan out of the grey list in 2015, the FATF put it back in 2018, with more regular periodic monitoring and stricter deadlines. No genuine policy action has been forthcoming. Unless non-cooperative regimes are made to pay a high cost for their inaction, mere listings will be inconsequential. Islamabad’s expectation of being let off lightly for playing a favourable role in the US-Taliban peace agreement only points to the need for a more effective FATF

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