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The FATF sham

Salman Rasheed

The writer is a Karachi-based research analyst and political consultant.

The decision by the Financial Action Task Force (FATF) on June 25 to keep Pakistan on the grey list despite successfully complying with 26 out of 27 demands came as a shock to most Pakistanis and outside observers. I too was surprised when hearing the decision but at the same time should not have been, given the politics played by the big international powers like the US and their allies in the West and India to put pressure on Pakistan to act on their whim’s contrary to our best interests.

It seems that Prime Minister Imran Khan’s answer of “Absolutely not” in a recent interview regarding the use of Pakistan territory by the US for any sort of action inside Afghanistan didn’t go over too well with Biden Administration and other global powers and now applying pressure through FATF to get Pakistan to behave. I completely agree with our Foreign Minister Shah Mahmood Qureshi when he questioned the FATF decision saying, “it is to be determined whether FATF is a political forum or a technical one and whether it is being used to achieve political objectives.”

I believe that keeping Pakistan on the grey list after meeting 26 out of 27 demands and then directing us to meet an additional 7 agenda items within the next 12 months has exposed FATF’s decision-making process and the entire FATF framework as a sham to corner countries to submit to the will of the global superpowers.

Can anyone explain to me and my fellow Pakistanis why countries like Korea and Lithuania having similar scores to Pakistan are on the FATF white list but we remain on the grey list? Or if someone can explain to us why the US with a lower largely compliant score and higher non-compliant score than Pakistan is on the white list? Why FATF and other international organizations aren’t seriously probing the illegal sales of uranium in the black market in India?

It’s not a hidden secret that the largest money-laundering haven in Europe is the UK and American banks hold the most laundered money. The leak of the US Financial Crimes Enforcement Network or FinCen documents back in September 2020 reveals that criminals have moved around $2 trillion in transactions of dirty money through some of the world’s largest banks. The $2 trillion figure complied from Suspicious activity reports, or SARs between 2000 and 2017 is just a small drop in the bucket.

The FinCen documents reveal the following:

  • HSBC allowed fraudsters to move millions of dollars of stolen money around the world, even after it learned from US investigators the scheme was a fraud.
  • JP Morgan allowed a company to move more than $1bn through a London account without knowing who owned it. The bank later discovered that a possible mobster on the FBI’s 10 Most Wanted list might own the company.
  • Evidence that one of Russian President Vladimir Putin’s closest associates used Barclays bank in London to avoid sanctions that were meant to stop him from using financial services in the West. Some of the cash was used to buy works of art.
  • The husband of a woman who has donated £1.7m to the UK’s governing Conservative Party was secretly funded by a Russian oligarch with close ties to President Putin.
  • The UK is called a “higher risk jurisdiction” and compared to Cyprus, by the intelligence division of FinCEN. That’s because of the number of UK-registered companies that appear in the SARs. Over 3,000 UK companies are named in the FinCEN files – more than any other country.
  • Chelsea’s owner Roman Abramovich once held secret investments in footballers not owned by his club through an offshore company.
  • The UAE’s central bank failed to act on warnings about a local firm that was helping Iran evade sanctions.
  • Deutsche Bank moved money launderers’ dirty money for organized crime, terrorists, and drug traffickers.
  • Standard Chartered moved cash for Arab Bank for more than a decade after clients’ accounts at the Jordanian bank had been used in funding terrorism.
  • FinCen implicates 44 Indian banks and financial institutions with hundreds of transactions flagged as “top secret suspicious-activity reports.”

Given the above revelations from FinCen documents, the US, UK, India, Germany, and UAE just to mention a few look like the mafia compared to Pakistan but ironically, they are on the FATF white list, a real head-scratcher for most rational-minded observers.

However, the revelations regarding Indian financial institutions raise questions about the degree to which the Indian government has contributed or ignored the financing and sponsoring of terrorist activities in Pakistan, Kashmir, and Balochistan, especially given current and former members of India’s armed forces have admitted doing so over the past two decades. Why FATF has its head in the sand like an ostrich regarding the dubiousness of the Indian financial system?

It’s pathetic to see the reaction of our opposition parties, especially PPP and PMLN blaming the current PTI government for not getting Pakistan off the FATF grey list when we all know that these two parties did nothing to introduce legislation to comply with FATF regulations when they were in power from 2008 to 2018 or the “decade of delusion.”

Let’s face reality, it was never in the interest of the PPP and PMLN to pass hard-hitting legislation against money laundering since many of their leaders are allegedly involved in this crime and facing trial in our courts.

To give credit to where it’s due, it was the PTI government during the last three years that took serious actions to comply with FATF demands to avoid Pakistan’s demotion to the blacklist while the opposition was trying to shamelessly use their approval for FATF-related legislation that was in the national interest, as a bargaining chip to obtain concessions on various corruption cases.

In a 2018 interview before the general elections, former PMLN Finance Minister Miftah Ismail accepts his fault for not keeping Pakistan off the FATF grey list and refuses to blame the then caretaker government.  Furthermore, former federal minister Ahsan Iqbal, the “Aristotle” of PMLN tweets in March 2018 that FATF placed Pakistan on the blacklist in 2008 then upgraded to grey in 2010 and back to black in 2012, implying this is all happening during the tenure of the PPP government.  He also mentions that under the PMLN government, Pakistan went from FATF blacklist to grey in 2014 then promoted to white list in 2015, and demoted again to the grey list in 2018.

When both PPP and PMLN governments didn’t pass any legislation to address FATF’s 27 concerns from 2008 to 2018, how did Pakistan manage to be on the white list from 2015 to 2018?  Was this a reward from the global superpowers for the formulation of the National Action Plan in 2015 after the Army Public School attack in Peshawar and military operations against terrorism in the tribal areas?  If so, the lesson here is that if Pakistan gives airbases to the US, we will be immediately upgraded to the white list.

The FATF decision to keep Pakistan on the grey list is also a message and wake-up call to our judiciary that keeps granting bail to alleged money launderers like the Sharifs, Zardaris, et al and doesn’t adjudicate their cases promptly. Moreover, it’s decisions like FATF that continue to push Pakistan into the Chinese camp despite the US and other Western countries’ wanting us to leave the Chinese and align with them. Given this, I don’t blame Prime Minister Imran Khan for stating the reality of linking our destiny with China. If promotion to the FATF white list means perpetual servitude to the US, Indian and Western interests then Pakistan should remain on the grey list instead of always selling out our national interest.

Our ideological father, the great thinker and philosopher Allama Muhammad Iqbal in the following couplet has given us the ideal to aspire to in this situation: “Ae tair-e-lahoti us rizq se mout achi Jis rizq se aati ho parwaz mein kotahi”. “O ethereal bird! It is better to starve to death, Than to live on prey that clogs thy wings in flight.”