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FATF Greylist: Any Way To Get Out!

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Money laundering (concealment of illegally gained money then appear legal) and terror financing (activities which provide finance to individual terrorists or militant groups) nowadays is a big and dire problem. Many countries are engulfed in these problems and trying to get rid of it. Many steps have been taken to overcome these problems but all were in vain. When realized that it is a hard nut to crack a force was set up to root out terror financing and money laundering known as Financial Action Task Force (FATF). Financial Action Task Force commonly known as FATF is a global task force formed in 1989. This task force consists of 37 countries, with its headquarter in Paris, France. It is currently under the presidency of Mr. Marshall Billingslea who was appointed on July 1, 2018. Three main FATF observers are Indonesia, Israel, and Saudi Arabia. The main purpose of this force is to develop policies to combat money laundering and terror financing.

FATF has provided a series of recommendations which can be followed to stop money laundering and terror financing. Countries are monitored worldwide by the task force to examine if they have acted upon its recommendations to restrain the flow of funds to banned organizations (mafias, terrorist outfits, militant groups etc.). Since this is a serious threat at an international level to the integrity of an international financial system, this task force laid down the foundation of a list of those countries which are affected by or who are involved in money laundering and terror financing is known as greylist.

Pakistan’s history in the FATF greylist

It was 2009 when first time Pakistan was put into the Grey List. At that time Government of Pakistan People Party (PPP) was on the run. Later, the name of Pakistan was excluded from the greylist. After that, Pakistan’s name was again included in greylist in 2012 for the second time. In 2013 government of PPP ended and Pakistan Muslim League-Nawaz’s (PML-N) supremo Nawaz Sharif’s Government tenure started. Amid inclusion of Pakistan’s name in the grey list, Chief of Army Staff (COAS) launched an operation on June 15, 2014, against terrorism and militant groups called Operation Zarb-e-Azb. As this operation was on the run to hunt down the terrorists, world’s fourth-deadliest Army Public School (APS) massacre happened after which operation against terrorists intensified more. This operation helped a lot in a decimation of terrorism. When witnessed by FATF watchdogs that terrorism has been reduced to the much extent, name of Pakistan was excluded from the greylist in 2015.

As we know after 2015, terrorism has reduced more as compared to previous years and can be seen that it has almost vanished in Pakistan then what are the reasons that Pakistan’s name is again included in the greylist?

These were the aggressive tweets of Donald Trump in the month of January which pointed out that “the US has foolishly given $33bn to Pakistan to curb terrorism but Pakistan has done nothing in return except lies and deceit. Pakistan has failed to hunt down the terrorist and is providing safe haven to them.”

As a result of Trump’s tweets, a meeting was conducted and a petition was launched in which Pakistan needed three votes to stay out of the greylist and Pakistan did grasp the required number of votes (Turkey, China, and Saudi Arabia) and abstained itself to be placed to the list. After this, Khawaja Asif erupted and tweeted that we have thwarted the US’s agenda to put Pakistan to the list due to which Donald Trump jointly by Modi led Indian Lobby after two or three weeks again pressurized FATF for an unprecedented second discussion on Pakistan. Pakistan again needed three votes to stay out of the list. By then, the US convinced Saudi Arabia to give up its support to Pakistan in return for full membership of FATF. Then there left only two, China and Turkey. China, which is known to be all weather friendly and whose friendship is higher than the mountains, deeper than the ocean informed Pakistan that they are “opting out as they don’t want to lose face by supporting a move that’s doomed to fail” and thus voted against Pakistan. Turkey voted in favor of Pakistan. So, this time only one vote goes in favor of Pakistan and thus Pakistan was officially placed in the greylist on June 28, 2018 regardless of the 26-points action plan formulated by the International Cooperation Review Group (ICRG) of the Asia Pacific Group (APG) which was also submitted to the FATF to choke terror financing, money laundering, ban militant groups including mastermind behind the Mumbai attack Hafiz Saeed-led JuD and its affiliates and totally freeze their assets.

Pakistan is the ninth country to be placed on the Paris based FATF’s grey list while other eight states with strategic deficiencies are Ethiopia, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen. The plan to put Pakistan into the greylist was jointly moved by the US and three key powers of Europe (the UK, France, and Germany) in February. Finance Minister Dr. Shamshad Akhtar represented Pakistan and argued to remove Pakistan from the greylist but they did not hear a word of her sayings.

Consequences of non-implementation of action plan

As being placed on the greylist. It is now worth exploring that what could this mean for Pakistan. How its placement can affect Pakistan’s efficiency at national and international level.

Mainly Pakistan’s inclusivity in greylist can squeeze its economy and could make it harder for the country to meet its ascending foreign financing needs. This could also lead to a downgrade in Pakistan’s debt rating. Pakistan may also suffer a risk downgrade by multilateral lenders like the International Monetary Fund (IMF), Asian Development Bank (ADB), World Bank and European Union (EU). Currently, these are the major risks which are expected can be inflicted on Pakistan.

In case of blacklisted

If Pakistan fails to comply with its 26-points action plan then there is no doubt that no one can save Pakistan to be placed on the blacklist of the FATF which means total disaster of the country. Currently, FATF blacklist features Iran and North Korea.

Being blacklisted means direct sanctions on Pakistan’s major international transactions, imports and exports, foreign loans, can distort its international standing, banks can pull out, can be a fall in foreign currency inflow, further fall in Pakistan’s large current account deficit (CAD), Pakistan’s stock market can fall at a greater speed. These are few disturbing factors for Pakistan if it ends up blacklisted.

In case of a blacklist, above cited sanctions might also result up as a chaos at a national level in Pakistan leaving no jobs for the masses of Pakistan, increase in debts, increase in taxes, inflation and would be directly and constantly scrutinized by FATF’s financial watchdogs. All confidential transaction will go through under watchdog’s surveillance.

By putting all these risks aside, the factual evidence, both historic and current, demonstrates the incorrectness of these mentioned assertions. Pakistan was on the FATF grey list from 2012 to 2015. A period in which Pakistan’s imports and exports remained stable and grey listing did not prove to be a significant barrier to trade.

Recently, a delegation of FATF came to Pakistan to review the implementation of the action plan and asked Pakistan to maximize the penalty and imprisonment period for those who proved to be involved in such offenses.

What to do to get out of greylist?

The only way for Pakistan to get out of the grey list is to focus on the 26-point action plan. Implementation of action plan effectively by taking enforcement action against illegal money and value transfer services (MVTS), control on illicit movement of currency, identifying and investigating terrorist financing activity and target designated persons and entities, and persons and entities acting on behalf or acting at the direction of designated persons or entities, prevention of moving funds to designated terrorists including freezing of their assets (both movable and immovable) and demonstrate enforcement against TFS (targeted financial sanctions) violations.

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South Asia

Taliban and the crisis in Afghanistan

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Source: Twitter

In 2021, the Afghan Taliban took back control of Afghanistan after fighting a rebellion for twenty years. The Taliban reformed and began regaining territory less than 10 years after the American-led invasion that overthrew the previous regime in 2001. In line with a 2020 peace agreement with the Taliban, they staged a swift assault as the US started to evacuate its last forces from Afghanistan.

Even though they promised to preserve the rights of women and communities of religious and racial minorities, the Taliban have enforced a strict interpretation of Islamic law. The Taliban have failed to provide Afghans with sufficient food supplies and economic possibilities as they have evolved from an insurgent organization to a functioning administration.

Numerous instances of human rights violations have been documented by the UN mission in Afghanistan. Because the Taliban scared off journalists and put limits on press freedom, more than 200 news outlets had to close. Activists and protesters have been tracked and forcefully disappeared, and their government has ruthlessly suppressed protests. They also reinstated the Ministry for the Propagation of Virtue and the Prevention of Vice, which was previously in place, and enforced laws against actions judged to be contrary to Islam. They instructed judges to apply their version of sharia in November 2022; in the following weeks, authorities resumed public hangings and floggings.

Women’s rights have been undermined. Due to restrictions put in place by the Taliban, girls are not allowed to go to high school, and women are not allowed to go to college or teach there. The group banned women from working for local and international voluntary groups in December 2022. According to estimates from the UN Development Program (UNDP), limiting women’s employment might cost Afghanistan’s GDP up to 5%. Amnesty International reports a substantial increase in the number of women jailed for defying discriminatory rules, such as those requiring women to cover their whole bodies while in public and to only appear with male chaperones. In addition, there are now more child marriages.

The UNDP says that the Taliban’s rule has also taken away the gains that Afghans made in their living conditions in the 20 years after the US invasion. In a study from October 2022, the organization claimed that practically all Afghans were living in poverty. Since the takeover, the economy has contracted by up to 30%, and there have been an estimated 700,000 job losses. More than 90% of individuals are impacted by food insecurity. The problem is getting worse because several countries and international groups have stopped giving aid, which is vital to the economy and public health.

International observers are nonetheless worried that the Taliban pose a danger to national and international security through their funding of terrorist groups, especially Al-Qaeda. Taliban leadership might convert Afghanistan into a haven for terrorists who could launch attacks against the US and its allies, despite Taliban pledges that the country’s territory wouldn’t be used against the security of any other country. The violence has also increased along Pakistan’s border with Afghanistan, which has always supported the Taliban. Tehrik-e-Taliban, a terrorist organization commonly referred to as the Pakistani Taliban, has gained strength due to the Taliban’s ascent to power. The organization broke off a cease-fire with the Pakistani government in 2022 and began carrying out assaults throughout the nation. Officials from Pakistan have charged the Afghan Taliban with giving the extremists a safe harbor in their country.

For many years, the Afghan government relied on help from a number of countries; according to 2019 World Bank research, contributions from foreign partners funded 75% of the government’s public expenditures. Many of these countries stopped off aid when the Taliban took control, fueling concerns about potential future economic turmoil. Nevertheless, aid rose in 2022 as donors sent more than $2.6 billion. The US has donated more than $1.1 billion in help since the coup. However, according to UN authorities, the pledges fell short of the nation’s humanitarian requirements.

Many Western countries, most notably the US, shut down their diplomatic posts in Afghanistan when the Taliban took power. Diplomatic relations and recognition have been withheld from the Taliban regime, which refers to Afghanistan as the Islamic Emirate of Afghanistan. The UN General Assembly has also postponed a decision on who would indefinitely represent Afghanistan at the UN. The Taliban are now being investigated by the International Criminal Court for suspected atrocities, including crimes against humanity, committed against Afghans.

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Decoding Donald Lu’s Visit: A Positive Upward in US-Bangladesh Relations?

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The U.S Assistant Secretary for South and Central Asia Donald Lu paid a visit from January 12 to 15. During his brief but swarming itinerary the two parties discussed various issues ranging from diplomatic to political. Interestingly, this is the 11th visit of any U.S high-official in the past two years. The frequent swapping of delegations from the both sides pose a critical juncture between the U.S-Bangladesh relationship. Experts believe that recurrent visits from US high-ups are definitely an auspicious sign between the relationship of the two nations. Therefore, the visit of Donald Lu is an offshoot of the “growing reciprocity and renewed engagement” between Dhaka and Washington.

Needless to say, Bangladesh has a long standing and steady relationship with the US since the latter recognized the former shortly after independence on April 04, 1972. Recently the US-Bangladesh celebrated the completion of 50 years of bilateral relationship and US President Joe Biden termed this as “robust partnership”. Amid such backdrop, it goes without saying that the recent visits signal to a significant positive tie-up between the two parties and the visit can be interpreted in the context of international and domestic backdrop of international politics.

The US is the largest market for Bangladesh’s RMG export. Naturally, the issue of GSP reinstatement plays a key role in bilateral camaraderie. Under such circumstances, Lu’s visit is important to hold talks of economic in the context of Bangladesh’s growing needs, especially after the LDC graduation. Moreover, in the annual Global Firepower 2023 Military Strength Ranking, Bangladesh is placed 40th out of 145 nations. On the other hand, Bangladesh came in 12th place on the GFP review’s list of ‘Strengths on the Rise,’ which emphasizes national military powers based on strong growth patterns until 2023. In this context, the General Security of Military Information Agreement (GSOMIA) and Acquisition and Cross-servicing Agreement (ACSA) agreement indicates to a deeper and strategic engagement from the US rationale.

Bangladesh’s stands at the heart of a strategic position of the US’s Indo-Pacific Strategy, which aims to counter the increasing footprint of China in the Indo-Pacific region. However, Bangladesh maintains a neutral position in terms of its foreign relations and has been carefully helming without taking any side of any major powers. Washington’s focus on free and fair election is important to maintain a stability in the greater Bay of Bengal neighborhood- an important feat in it’s IPS. Conversely, Bangladesh values economic partnership to sustain her ongoing upward trend. However, at the same time Bangladesh should be careful not to succumb to any pressure, a case in point when the Foreign Minister announced that the US proposed strategy is being vetted under the lens of economic opportunity.

On the domestic fore, arguably, the U.S has been advocating for a free and fair election, upholding democratic values, and condemning extra judicial excesses. However, continuous engagement between the two parties resulted helping to mitigate tensions and create a more positive atmosphere. The crux of Donald Lu’s visit is to reaffirm democratic ideals in state mechanism, rule based international system and Bangladesh to be part of the Indo-Pacific Strategy. Accordingly, Bangladesh has committed to hold a fair election and the recent decline of the controversial RAB’s extrajudicial excesses reported by Human Rights Watch as well as peaceful demonstrations of the opposition have been markedly praised by Donald Lu. From Bangladesh’s perspective rescinding of sanctions, reinstatement of GSP, and more support for Rohingya Refugees were reiterated. More importantly, Dhaka’s impartial foreign policy goals align with Washington’s interest in the South Asian region and it will be of American interest to consider Bangladesh as an important ally in the geopolitical chessboard of the Indo-Pacific region.  

However, the visit is also crucial for Donald Lu who is accused of meddling with the internal affairs of Pakistan, Sri Lanka and Nepal. But, Donald Lu manifested his diplomatic acumen to “manage the fissures of the diplomatic ties’ and “highlight on the areas of convergence” in the recent visit. Evidently, the past year has been tumultuous for South Asian nations, following the collapse of Colombo, the Pakistani Economic Crisis and the revolving debt crisis around the region. Amongst her neighbors, Bangladesh has endured relatively steady political and economic pursuit. Therefore, US needs to formulate a comprehensive South Asian policy to accommodate the interests of the respective nations on its own merit.

Bangladesh’s relationship with the U.S is vital in both economic and political stance. Continued engagement and partnership between the two states is critical for the security of South Asia as well as Bangladesh’s ongoing economic prosperity. On a pragmatic tone, it would take more than just this one visit for Bangladesh to solve these complex geopolitical issues. For now, the visit has symbolized strengthening of U.S-Bangladesh relationship going forward by exonerating the mutual interests to diplomatically resolve pressing bilateral issues and elevation of continuous engagement.

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South Asia

Praiseworthy Development of RAB in the Last Year

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Rapid Action Battalion (RAB) image source: benarnews.org

On December 10th 2021, the United States of America (USA) announced sanctions against Rapid Action Battalion (RAB) and its seven current and former officials on allegations of Human Rights violation. Such unilateral decisions of the US on the elite force surprised many. But Bangladesh chose to respond maturely through diplomatic communication. Since then, Bangladesh increased diplomatic engagement with the US, a method lauded by many as ‘prudent’ also.

Since the sanction, Bangladesh enhanced its effort to uphold the Human Rights situation in Bangladesh. RAB as an elite force also acknowledged the sanction and behaved in a more professional way. And it seems after one year, there are significant developments regarding both RAB and government policy. Foreign dignitaries and organizations are also lauding these developments.

Efforts from Bangladesh

After the announcement of the sanctions, Bangladesh immediately contacted the US diplomatic institutions to understand and assess the situation. As a part of the efforts, Bangladesh established Human Rights Cell in the Foreign Ministry under its United Nations wing.

Bangladesh also increased its diplomatic communications with the US, not necessarily because of the sanctions, but also due to growing geopolitics in the Indo-Pacific region, and commitment to deepen bilateral relations with the US. In the last two years, both countries undertook 18 bilateral visits of mid and high-level. Bangladesh sent 7 delegations to the US while the US sent 11 delegations including Donald Lu’s latest.

Both countries also hold the bilateral Partnership Dialogue and Security Dialogue in March and April of 2022. In the same year, they also celebrated 50 years of their anniversary. Bangladesh’s foreign minister also met his counterpart in April 2022.

While many rogue states such as North Korea, react to the US sanctions by projecting hard power or test-launching missile, Bangladesh resorted to diplomatic means to raise and provide an update about the agenda to its counterpart. Almost in all diplomatic meetings, Bangladesh raised its concern about the sanction. Bangladesh even gave a ‘non-paper’ dossier to Under-Secretary Victoria Nuland, when Nuland came to Bangladesh in March 2022.

Significant Developments

Since the US sanctions on 10th December 2021, the allegations of extrajudicial killings have gone down in Bangladesh. It has reached zero after one year. There were no new allegations of extrajudicial killing by RAB for the last 13 months. RAB’s name was not also mentioned in any other allegations or negative deeds. Therefore, RAB is maintaining a ‘clean record’ at least for last 13 months or so.

Apart from that, the Human Rights situation also improved in Bangladesh in the meantime as the government gave extra effort to project the situation to the international community. During Under Secretary Nuland’s visit in March, she also acknowledged that the situation has improved.

The US Assistant Secretary Donald Lu also acknowledged the further development regarding the allegations against RAB. Secretary Lu visited Bangladesh on January 14th and 15th. He also acknowledged the falling extrajudicial killing in Bangladesh. He also said that there was ‘tremendous progress’ in reducing extrajudicial killings after the US sanctions.

Home Minister Asaduzzaman Kamal also told the media that the US delegation is satisfied with RAB’s current activities. In another expert talk with The Business Standard, the Home Minister further said that the US also praised the actions of Bangladesh in combating militancy, terrorism, arson, and radicalism.

Apart from the US, global watchdogs are also acknowledging the fact. Human Rights Watch World Human Rights Report 2023 mentioned that there is a ‘drop-in abuse’ in Bangladesh (See Page 68).

Such transformation in the US perspective within only 13 months regarding a sanction is very unique considering the history of sanctions. Bangladesh’s diplomatic efforts and commitment to upholding Human Rights deserve praise in this regard. Till now Bangladesh is dealing with the issue prudently.

Lifting the sanctions in a diplomatic manner will require making it a national security interest for the USA. An elite force with a ‘clean record’ and its die-hard effort in curbing terrorism and militancy, fighting drug and human trafficking, and anti-piracy drive can easily draw US national security interest in this region. And RAB has the ability to become so. Considering the historic relations between the US and Bangladesh, the Sanctions are the only ‘strain’ in this bilateral relationship. Lastly, as there are praiseworthy developments, both countries are likely to pass beyond this issue in the near future if Bangladesh continues to maintain the positive trend.

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