Malik Nasir Mahmood Aslam revisits the continuous difficulty
FATF has become a running sore for Pakistan and this agency has rankled fears amidst the decision-making circles of the country. The financial handlers of Pakistan are now again on tenterhooks as the FATF plenary is in session again. The plenary is attended by delegates representing 206 members of the Global Network and observer organisations including the UN and the International Monetary Fund and will deliberate between 1and 4 March 2022. It is reported that the event will take place in a hybrid format with a significant number of participants expected in person due to the gradual easing of COVID-19 related restrictions in many countries.
It is expected that in the plenary delegates will discuss key issues including revisions to the FATF Recommendations to strengthen transparency of beneficial ownership information, a priority for the FATF and the international community. This is a potent issue though the plenary will also focus on money laundering and terrorist financing risks arising from migrant smuggling. Moreover, the plenary will also deliberate assessment of French measures to combat money laundering and terrorist financing and hear the progress made by some jurisdictions identified as presenting a risk to the financial system. It is also reported that the outcomes of the FATF plenary will be published on Friday 4 March after the deliberations conclude.
From Pakistani perspective this FATF meeting is of considerable importance as focus will remain on whether the country will be taken out of the grey list and placed on the white list or it would face the difficulty of being sent down to the black list. While discussing this issue it must be kept in view that FATF evaluation can potentially be employed as a foreign policy tool especially by its member countries who by virtue of their large size GDP already possess enough geopolitical influence both on multilateral organisations and on individual countries. It is to be viewed in this context that Pakistan is under increased monitoring of the FATF since 2018 and is the only country that is asked to simultaneously comply with the recommendations of both the FATF and the APG, quite an unusual form of financial coercion.
Realising the pressures of time Pakistan has consistently and proactively taken steps to tighten its monetary regulatory mechanism aimed at curbing money-laundering and terror financing and is also eagerly documenting the informal and undocumented economic sectors. Pakistani policy makers are keenly aware that documenting the economic aspects of the country will certainly assist in expanding its tax base and increase the share of direct taxes in its total tax revenue that is widely credited to be the prevailing practice of the modern economic practices. Pakistani policy makers themselves point out the problems of relying on indirect taxation as this avenue cannot bear the entirety of revenue generation in the country as adhering to such practice is inherently self defeating and should be reversed as early as is feasibly possible.
It is widely known that Pakistan complied to 26 out of the 27 given to it in 2018 that essentially dealt with crucial issue of terror financing. In the last plenary last October Pakistan was accordingly expecting to be given the clean health bill and taken out of the grey list but it was kept on it on the pretext that it did not complete the APG Action Plan that was handed to it only two months ago in July 2021. Despite the pressures on it Pakistan still complied with four out of seven action points of the APG in those two months indicating the seriousness with which the country takes such matters and the efforts it is willing to take about them.
The main issue here, however, is that the matter has become an intensely political one with where adversaries of Pakistan are employing it to put pressure on Pakistan. Many influential western analysts are consistently advocating to keep Pakistan on the grey list just as the Biden administration has lumped the Afghan cash financial assets to provide with compensation to the victims of 9/11 victims implying that this matter has been transformed into a policy issue with the aim to put pressure on Pakistan. The logic employed by the US policy makers is to punish Pakistan for the so-called collaboration of Pakistan with Afghan Taliban resulting in humbling American withdrawal from Afghanistan.
Many analysts are of the firm opinion that FATF is now employed as a coercive financial instrument in furthering foreign policy goals. The existence of FATF as an intergovernmental agency placed as an active financial watchdog has provided it with the required teeth to create problems for countries that do not fall in line with the intentions of the states having massive sizes of GDP and are willing to use their soft power aggressively. It is more than obvious that Pakistan is put under undue pressure and finds it difficult to avoid it. TW
Malik Nasir Mahmood Aslam is a seasoned social activist