New Delhi: The worldwide money-laundering supervisory body, Financial Action Task Force (FATF) has decided to put Pakistan on its terrorist financing watch list. Pakistan has been put under monitoring in its International Cooperation Review Group until June 2018.
On February 23, FATF decided to put Pakistan back on the “grey list,” imperiling it to direct monitoring and deep scrutiny by the International Co-operation Review Group (ICRG) on terror financing, impending further review in June. FATF maintains lists as grey and black, for recognizing nations that have fragile measures to counter and fight money laundering and terror funding.
The Financial Action Task Force (FATF) is an inter-governmental body which sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other connected threats to the integrity of the international financial system. The organization continues to focus its efforts on guaranteeing that its standards provide powerful tools to empower countries to protect the integrity of the financial system and contribute to safety and security.
Impact on Pakistan
FATF does not have the power to levy sanctions on a nation found non-compliant with the required standards. Whereas nation’s listing might have an effect on the international transactions since a nation would come under stern scrutiny. The decision of FATF would result in a major setback for Islamabad’s efforts to mend its negative image.
During such an extreme pressure from global watch-guards to safeguard against money laundering and terrorist financing, banks have been withdrawing from high-risk nations. The level of due conscientiousness by banks is already high in Pakistan. After being listed again in the grey-list, banks would have to reevaluate the situation in case of Pakistan.
China’s change in attitude towards Pakistan
China constantly obstructed efforts of India, the US, and the UK to label Jaish-e-Mohammad’s, chief Masood Azhar as a terrorist under the Al-Qaeda Sanctions Committee.
The US prospered calling a meeting for a second vote on moving Pakistan to ‘grey list’. During this meeting, China and Saudi Arabia changed their earlier stand by not saying anything. China and Saudi Arabia, Pakistan’s closest allies withdrew their objections after intense pressure from the US. The move is part of a broader strategy of the US to force Pakistan to cut its relations with terror groups in Afghanistan. The only country left contrasting the movement of Pakistan to a grey-list was Turkey. An earlier discussion on the same saw disagreement from China, Turkey, and Saudi Arabia, causing the motion to fail.
The US was supported in its attempt to put Pakistan on the grey-list by major allies; the UK, France, and Germany, which are all part of the 35 nations and two regional organizations that make up the FATF membership.
There are several reasons that why China now has to make changes in its attitude towards Pakistan. Firstly, China became the vice chair of the FATF, therefore it becomes mandatory for China to combat terror financing. Secondly, China is becoming a global power; therefore China must work to enhance global security. Thirdly, a peaceful and terrorist-free Pakistan is in Beijing’s own interest.