On September 16, the Pakistan Tehreek-e-Insaf (PTI) Government has managed to wrap up the legislation needed to get rid of the Financial Action Task Force’s (FATF) grey list, as three crucial bills were passed in a joint session of the Parliament.
After the passage of the bills, PM Imran Khan congratulated his party members and allies on the passage leaders of the Opposition Shehbaz Sharif and PPP chairperson Bilawal Bhutto Zardari lashed out at the government for imposing black laws in the country by trampling parliamentary rules and democratic norms.
PM Imran alleged that the opposition parties tried to create obstacles to the passage of the bills that are critical for the country to defeat the current economic troubles.
He said their attitude during the parliamentary session and negotiations on the bills earlier proved that their interests were the opposite of Pakistan’s interests.
Financial Action Task Force
The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. FATF was established in July 1989 by a Group of Seven (G-7) countries in a Summit held in Paris.
The inter-governmental body sets international standards that aim to put off illegal activities and the harm they cause to society.
As a policy-making body, the FATF works to generate the essential political will to bring about national legislative and regulatory reforms in these areas.
With more than 200 countries and jurisdictions committed to implementing them. The FATF has developed the FATF Recommendations, or FATF Standards, which ensure a coordinated worldwide response to stop organized crime, corruption and terrorism.
They help authorities go after the money of criminals dealing in illegal drugs, human trafficking and other crimes. The FATF also works to stop funding for weapons of mass destruction. Pakistan is part of the FATF’s Asia Pacific Group.
Grey and blacklists of FATF
The Financial Action Task Force (FATF) is an independent inter-governmental body. Those countries which don’t support terror funding and money laundering are placed in the grey list by the FATF.
Meaning of Black List: Only those countries are included in this list that FATF considers as uncooperative tax havens for terror funding.
These countries are known as Non-Cooperative Countries or Territories (NCCTs). In other words; countries that are supporting terror funding and money laundering activities are placed in the Blacklist.
Meaning of Grey List: Those countries which are not considered as the safe heaven for supporting terror funding and money laundering; included in this list. The inclusion in this list is not as severe as blacklisted.
Now Greylist is a warning given to the country that it might come in Blacklist (Just like a yellow card in a football match). If a country is unable to curb the mushrooming of terror funding and money laundering; it is shifted from the grey list to blacklist by the FATF.
Pakistan joins the gray list
Pakistan was included in the grey list for the first time in 2012 and remained in it till 2015. On 29 June 2018 FATF Grey listed Pakistan for the second time. The process began in February 2018 when FATF approved the nomination of Pakistan for monitoring under its International Cooperation Review Group (ICRG) commonly known as the ‘Grey list’.
Currently, Pakistan is in the Grey list of FATF. Due to increasing pressure; Pakistan is striving to comply with all the 27 FATF Targets. But as in October 2019; it could manage to comply with just 5 targets out of 27. But Pakistan again saved by its all-weather friend China, currently in the FATF chair.
Earlier, the FATF has given another 4 months’ time to Pakistan (February 2020) to comply with all the 27 FATF targets otherwise it would be blacklisted.
Opposition and FATF laws
The opposition had proposed a number of amendments in the legislation swiftly rejected by the government.
This included curtailing the powers of NAB from probing cases older than five years, removing money-laundering as a cognizable offense, and removing corruption allegations worth one billion rupees from NAB’s scope. All this shows that the opposition was attempting to protect itself by linking FATF with NAB laws.
NAB has been used in the past to launch politically motivated cases and opposition parties were also given concessions but this does not imply that the anti-graft watchdog should be wrapped up.
The opposition wants the accountability drive to start from 1999 and wants to evade the process by suggesting that NAB should be removed from the list of investigating agencies.
The opposition strongly opposed the government’s anti-money laundering and terrorism bills, but despite their numerical advantage, the opposition could not stop the passage of these bills.
Effects of approval of bills
If Pakistan does not meet the criteria laid out by the FATF, it could fall to the blacklist, potentially being unable to obtain financial support from the World Bank, the International Monetary Fund (IMF), the Asian Development Bank (ADB), and other international institutions.
In fact, over the last two years, Pakistan has made progress by fulfilling fourteen of the criteria required by the FATF, like developing an integrated database at airports for better coordination across financial, administrative, and law enforcement agencies, and establishing successful outreach and regulatory safeguards aimed at countering terrorist financing within the country’s financial sector.
The country’s status on the FATF grey list inexorably impacts Pakistan’s ability to attract foreign investors. This is incredibly important in the current economic climate of the COVID-19 epidemic where there are severe barriers to economic growth internationally.
Usually, Pakistan’s grey list status could impact imports, exports, remittances, and its ability to borrow money from international lenders.
If Pakistan cannot make the necessary reforms for FATF compliance, it will be hard-pressed to convince the international community that it can and will make necessary reforms for investors.
This remains a serious impediment to Pakistan’s business climate as well as the growth of its e-commerce and digital finance sector. In this scenario, all the demands put forward by the opposition are aimed at protecting corruption or blackmailing the government.
However, the government, despite strong opposition, passed the bills, easing fears of a blacklist over Pakistan.
Now the prospects of getting out from the FATF gray list to have also become bright, after which the confidence of foreign investors and institutions will be restored and the country will move towards prosperity.
ADVERTISEMENT
