DesPardes + PKonweb

Diplomatic Support Help Make Pakistan Foil India’s FATF Move to Blacklist It

Pakistan has to meet the FATF deadline — January 2019 — to complete its action plan aimed at fully blocking the money laundering and other financial loopholes.

PKONWEB — India’s efforts at the Financial Action Task Force (FATF) to move Pakistan from grey list to the black list has been thwarted as ally China, Malaysia and Turkey voted against the move– the minimum requirement is 3 countries voting against it.

According to some observers, the is a highly significant development for the country which is facing economic crisis and fiscal issues amid diplomatic brinkmanship by its detractors.

Islamabad requires at least 15 out of 36 votes to move out of the watchdog’s grey list, which is causing an estimated loss of $10 billion per year.

While Pakistan managed to garner much-needed support from these three member states of the Financial Action Task Force (FATF) to avoid being placed on its blacklist, but black clouds are still hanging over it.

Islamabad has been on the global money laundering watchdog’s radar since June 2018, when it was placed on a grey list for money laundering and terror financing risks after an assessment of the country’s financial system and security mechanism.

“US opposition is not based on FATF charter but on political consideration, mainly because of clash of interests in Afghanistan, and Islamabad’s ever-growing relations with China.”

Ali Sarwar Naqvi, former Pakistani ambassador

Turkey was the only country that had opposed the move which was backed by the United States, the United Kingdom and Pakistan’s arch-rival India. Islamabad’s longtime ally Beijing had abstained.

Moving one step further, New Delhi — co-chair of the joint group of FATF and Asia Pacific Group — wants Islamabad to be placed on the Paris-based watchdog’s blacklist of the countries, which fail to meet international standards in combating financial crimes.

Pakistan loses $10 billion annually to money laundering, while daily corruption in country was over 2 billion as per authentic reports cited by a PTI government lawmaker Murad Saeed.

However, an aggressive diplomatic push from Islamabad has frustrated the looming threat with the support of Turkey, China, and Malaysia.

According to the 36-nation FATF charter, the support of at least three member states is essential to avoid the blacklisting.

Pakistan loses $10 billion annually to money laundering, while daily corruption in country was over 2 billion as per authentic reports cited by a PTI government lawmaker Murad Saeed.

Confirming the development that took place at the five-day meeting of the watchdog’s Plenary and Working Group meeting in Orlando, Florida last week, an official at Pakistan’s foreign ministry admitted that “the danger is still not over”.

The group will formally announce the decision of not blacklisting Islamabad in its Plenary scheduled in Paris on Oct. 13-18.

“This is certainly a positive development that there is no imminent threat of blacklisting [by the FATF] due to crucial support from Turkey, China and Malaysia,” the official told Anadolu Agency on condition of anonymity as he was not allowed to make a public statement due to the sensitivity of the matter.

But, he added, Pakistan had to meet the FATF deadline — January 2019 — to complete its action plan aimed at fully blocking the money laundering and other financial loopholes.

Pakistan, in recent months, has taken some major steps in accordance with the action plan, which includes, no foreign currency transactions without a national tax number, and ban on currency change of up to $500 in the open currency market without submission of a national identity card copy.

In addition, Islamabad has also proscribed several militant groups and seized their assets, including Jamat-ud-Dawa’h, and Jaish-e-Mohammad (JeM) — the groups blamed for several terrorist attacks such as the 2009 deadly Mumbai attacks killing over 150 people.

Islamabad requires at least 15 out of 36 votes to move out of the watchdog’s grey list, which is causing an estimated loss of $10 billion per year.

About the US opposition to Pakistan in the FATF, Ali Sarwar Naqvi, a former ambassador to Jordan, Belgium, and Austria– who also served as an acting ambassador to the US, said: “Pakistan cannot do much to persuade the US. The fact is that the US opposition is not based on FATF charter but on political consideration, mainly because of clash of interests in Afghanistan, and Islamabad’s ever-growing relations with China.”

Mohiuddin Aazim, a Karachi-based economic analyst said he thinks Pakistan is likely to be removed even from the gray list though FATF may make some observations urging Islamabad to remain vigilant and continue to strengthen its anti-money laundering and counter-terrorism financing regime.

“The removal of Pakistan from the gray list is likely both due to diplomatic support of China, Turkey and Malaysia and due to a host of measures the country has taken to stop money laundering and terror financing,” Aazim told Anadolu Agency.