Financial Action Task Force (FATF) has been an integral part of the economic decision making and regulatory procedures of the country. The days of the ultimate decision are finally on cards as the Global Watchdog is expected to evaluate and review the performance and strategies of Pakistan via virtual meeting tentatively scheduled for February 22-25, 2021. This would be a much-anticipated review since a keen eye would be payed following a long hiatus to the litigations recently undertaken by the country to eliminate the risks and gaps in the financial framework which might earn Pakistan, a way out from the grey list. However, while the preceding meeting only guided more hopes for better litigation and measures to curb terror financing, brimming foreign propaganda and nefarious rulings within the country itself might hamper the way out but instead could dig the trench further towards a harrowing financial turmoil.
Pakistan was placed on the grey list back in June 2018 due to strategic deficiencies. Just before the Covid-19 pandemic wreaked havoc in the world, Pakistan was allowed a breather of 4-months to comply with the 27-point action plan; of which Pakistan met only 14 targets while missing out on the rest of 13 targets. Moreover, Pakistan could only satisfy 10 of a total of 40 recommendations devised by the task force. These lags led to a major pitfall in the Pakistan’s Stock Market; PSX plummeting bellow 30,000 points. Furthermore, a bitter narrative started blooming regarding arch-rival India pulling all the strings to push Pakistan down further, even in the blacklist. This was largely shunned by the Indian representatives but the failure of the economic and diplomatic front of Pakistan was evident by now.
The FATF plenary was scheduled, like traditionally, in June. However, all scheduled evaluations and review procedures were deferred for 4-months in the wake of the Covid-19 pandemic, allowing yet another unforeseen yet thoroughly welcomed relief span to Pakistan to strive more actively to meet the requirements.
In the preceding 4 months, Pakistan acutely worked to amend the contradicting laws and policies, the parliament playing an agile role to introduce new bills relating to counter-terrorism and countering money laundering as an act to expedite compliance to the international laws and ultimately meeting up all 27 points in the action plan. Almost all the bills presented, albeit some political resistance, were eventually passed which even led to optimism in the stock market; PSX climbing back over 40,000 points after more than half a year, rallying to record high levels despite of the pandemic wreaking havoc on the investors’ mentality across the globe.
The meeting held, after a steep deferral, back in October 2020; the FATF committee observed and commended on the vigilant stance assumed by Pakistan to crawl out of the Grey list. Pakistan has since delivered on 22 out of the 27 core points of the action plan defined. However, the meetings adjourned till February, retaining Pakistan in the grey list under the tag of ‘jurisdiction under enhanced monitoring’ whilst praising the steps of counter-terrorism and anti-money laundering adopted by Islamabad.
Pakistan was warned back in February last year that if not complied by the 27-point action plan, it could be a great threat to the foreign mechanism and would be eventually moved to the monitored jurisdiction, notoriously also known as the ‘Blacklist’. Later this month, FATF would examine if Pakistan meets the 8 key categories of the action plan; remedial actions taken against money laundering, counterfeit terrorism while also reviewing the vigilance of the institutions in countering Terror Financing and actively managing risk. The committee representing Pakistan would perpetually convince the plenary that the country in-fact meets the criteria and transitioning over the next month, the fate of the tormented economy would finally prevail in light of the decision made.
However, Pakistan has been sluggish in taking action against the notorious entities linked to terrorism around the region. The meeting nears with the pinned watch of UN regarding Pakistan’s role of providing a safe haven to Lashkar-e-Taiba founder, Hafiz Saeed, or the notorious acquittal of Ahmed Omer Sheikh, the prime culprit of the Daniel Pearle Murder case of 2002. Pakistan, however, claims to have made virtue on 22 of the defined 27 points while has garnered ‘Substantial progress’ on the remaining 5 points. Thus, the optimism brews that the meeting would push the country out of the list and would open more financial avenues especially in these distressful conditions.
Although Pakistan’s Foreign Office including the Foreign Minister, Shah Mahmood Qureshi, appears optimistic to climb out of the grey list after 3 years, the infamous decisions passed by the Supreme Court of Pakistan, the excessive money laundering cases surging against the ex-office holders of Pakistan and the determined efforts of India to subvert Pakistan in global politics, all thwart down that optimism bit by bit. And while some of the economic experts claim that the decision of advancing Pakistan off the Grey list would be naïve move and would arguably impact regional dynamics, the decision could fall in tandem with the preceding outcome of sustaining the grey list status or could deteriorate the level further as gauged by a political expert, opining his narrative: “The facts demand that Pakistan remain on the grey list. The FATF shouldn’t just keep Pakistan on the grey list. It should rather warn Islamabad that absent rapid and wide-ranging reform; blacklisting is coming”.