FATF: A Case Study of Pakistan


The Financial Actions Task Force (FATF) is charged with the task to combat money laundering (ML) and terror financing (TF) to protect the International Financial System. The decisions of the FATF in the case of Pakistan are inimical to the integrity of this intergovernmental organization as it shows the non-uniformity in its dealing with cases of different states. For example, Pakistan, which has accomplished most of the tasks given by the FATF, is still on the grey-list while the FATF does not question India for the money laundering of billions of dollars and sponsoring terrorism in the region.

The FATF, an intergovernmental organization, aims to combat terror financing and money laundering. The FATF works as a policy-making body that gives recommendations to the countries to fight the issues of money laundering and terror financing and imposes sanctions on the states which do not adhere to the guidelines of the FATF. Pakistan was grey-listed by the FATF in 2018 for not taking the required actions against terror financing and money laundering issues in Pakistan as FATF had demanded to put restrictions on the financing of terrorist organizations in Pakistan and also to control money laundering. A 27-Point Action Plan was decided between Pakistan and the FATF which would enforce the anti-money laundering and counter-terror financing policies.

Since 2018, the government of Pakistan has taken practical and determining corrective measures to improve Anti-Money Laundering (AML) and Counter-Terror Financing (CTF) processes. Initially, Pakistan focused on the operations by Law Enforcement Agencies (LEAs) and created task forces & governmental bodies to for the implementation of the resolutions 1267 and 1373 of the United Nations Security Council (UNSC). The bank accounts and assets of 66 banned organizations have been frozen by the government of Pakistan and 7600 proscribed persons have been arrested. Afterward, the government of Pakistan worked to bring legislative and administrative reforms for the execution of the 27-Point Action Plan of the FATF for Pakistan.

Three plenary meetings by the FATF have been held to evaluate the progress of Pakistan’s compliance with the 27-Point Action Plan, so far. The recent meeting held in October 2020 concluded that Pakistan has made significant progress and successfully complied with 21 out of 27 points. The FATF should have removed Pakistan from its grey-list due to Pakistan’s unmatched progress among the countries which are in the grey-list of FATF and circumvent the Indian political pressure. But, the FATF continued to place Pakistan on its grey-list until February 2021.

Contrary to Pakistan’s case, there are irrefutable pieces of evidence of money laundering and terror financing by India but the FATF does not hesitate to hold India accountable for these crimes. The FATF’s exceptional attitude towards India questions the impartiality and efficiency of the organization. India is involved in money laundering and terror financing at an extreme level which is threatening the peace in the region and also a formidable challenge for the protection International Financial System.

The top US financial watchdog, US Treasury Department’s Financial Crimes Enforcement Network (FinCEN), in its reports, filed on 23 September 2020, exposed the involvement of 44 banks including the state-owned banks of India for money laundering of 2 trillion USD which used for financing the terrorism peculiarly in the region. The Suspicious Activity Reports (SARs) found that over 2000 suspicious transactions happened between 2011 and 2017 which amounted to 1 billion USD.

Prior to the disclosure by the FinCEN, the United Nations’ report revealed that there is significant number of terrorist groups present in Assam, Kerala and Karnataka. Moreover, there are also tangible evidences that India is financing terrorism in Pakistan via Afghanistan and ISKP is also getting manpower from India. The report of FinCEN also recommended that the FATF should take part in controlling and containing these illegal and criminal activities. But, the FATF continued to give unjustifiable favour to India and Pakistan retained on the grey-list even with substantial progress.

In addition to it, the recent report of EU DisinfoLab, titled “Indian Chronicles: deep dive into a 15-year operation targeting the EU and UN to serve Indian interests”, exposed the Indian fake networks of dead think-tanks, dead NGOs, dead media outlets and even dead people which have been used to spread fake propaganda to serve the vested interests of India particularly to undermine Pakistan. Pakistan’s stance on Indian involvement in maligning the Pakistan’s image and sponsoring & facilitating the terrorist activities inside Pakistan stands vindicated after the EU DisinfoLab report but the FATF’s intended attempt to overlook Indian role in financing in terrorism and money laundering continues.

Now, as the plenary meeting of FATF is scheduled in the coming few days Pakistan should not only rely on its progress on 27-Point Action Plan, because the FATF has given politically motivated decisions in the past and ignored the tangible progress made by Pakistan. To mitigate the challenge of “Indian Lobby” and prevent the political influence on the decision of the FATF in case of Pakistan, Pakistan needs to work aggressively on two options. First, it should launch rigorous efforts to seek support from the powerful states especially the US and also raise voice at all possible forums against the non-uniform approach of the FATF across the globe regarding its assessment of ML/TF cases.

Secondly, Pakistan should build case of India’s crimes before the FATF. In addition to it, Pakistan needs to use diplomatic channels to expose the Indian involvement in money laundering and terror financing which will consequently build pressure on the FATF to avoid India’s influence on the decision of FATF about the Pakistan’s case. Pakistan has shown exceptional progress to comply with 27-Point Action Plan which has no match in the contemporary cases in the FATF. If Pakistan succeeds to deter the political influence over the FATF, it will exit the FATF’s grey-list by the end of coming plenary meeting of the FATF.

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