Pakistan is out of FATF ‘grey list’ on terror funding

Four years after it was placed on the “grey list” and penalised with severe financial strictures by the Financial Action Task Force, Pakistan won a major reprieve on Friday, as the international watchdog on terror financing and money laundering agreed to remove Pakistan’s name from the list of countries under “increased monitoring”. Reacting to the decision, the Ministry of External Affairs said that Pakistan must continue to take “credible, verifiable, irreversible and sustainable” action against terror groups on its soil.

In all, the FATF said Pakistan had completed two action plans comprising a 34-point tasklist in the period since 2018, and in a statement said that it “welcomes Pakistan’s significant progress” in its AML/CFT mechanisms.

“We are satisfied after a FATF inspection team went down, spoke to the authorities took a look and verified, and they were satisfied that there’s a high level political commitment on the part of the Pakistani authorities to not just implement the current set of action steps that they need to take, but they’re also committed to ongoing reform,” said FATF President T. Raja Kumar from Singapore, speaking to the media at the end of the plenary session.

India has protested Pakistan’s lack of action against cross-border terror groups responsible for attacks on India, but sources said went along with the final decision, as there was consensus in the room, and Pakistan had submitted “documentary evidence” of its actions against designated terrorists. 

“As a result of FATF scrutiny, Pakistan has been forced to take some action against well known terrorists, including those involved in attacks against the entire international community in Mumbai on 26/11 attack” MEA spokesperson Arindam Bagchi said, referring to the 2008 attacks in which 166 people were killed, and 294 injured belonging to 24 different nationalities.

“It is in global interest that the world remains clear that Pakistan must continue to take credible, verifiable, irreversible and sustained action against terrorism and terrorist financing emanating from territories under its control,” the spokesperson added.

Hailing the decision, Pakistan PM Shehbaz Sharif said exiting the FATF grey list was a “vindication” of Pakistan’s “determined and sustained efforts over the years”, and thanked Foreign Minister Bilawal Bhutto Zardari and Army Chief Gen Qamar Bajwa for their diplomatic efforts. 

Pakistan’s removal from the list was announced after a consensus decision of all 39-members, including India to accept the review of Pakistan’s efforts on strengthening its anti money laundering and combating terror financing (AML/CFT) mechanisms. Among the action plan tasks were that Pakistan align its laws to international laws on AML/CFT and pursue UNSC banned terrorists, including the prosecution of a number of terror groups and leaders including the Lashkar e Toiba’s (LeT’s) Hafiz Saeed, 26/11 handler Sajid Mir, commander Zaki Ur Rahman Lakhvi and others. While Pakistan failed to imprison Jaish e Mohammad Chief Masood Azhar, authorities pursued cases against him, declaring him “missing”.

During the meetings this week of the International Cooperation Review Group (ICRG), many countries reportedly pitched for Pakistan to continue its reporting to the FATF on its prosecution of various designated terrorists, while India made a specific mention of the need to credibly demonstrate action against Masood Azhar, who is “missing” and Sajid Mir, who was earlier declared dead, and then arrested and convicted in a matter of weeks in May 2022 by Pakistan.

India’s other neighbour on the list, Myanmar was moved from the grey list to the “black list” due to actions by the military leadership after the 2021 coup, and will face even more severe financial sanctions and an inability to procure IMF, World Bank and ADB loans.

Meanwhile, the FATF final statement “condemned” Russia’s war in Ukraine, and ratified an earlier decision to suspend Russia from FATF committees, but the grouping failed to come to a consensus on removing Russia from the group or on placing it on a “black list” along with Iran, North Korea and now Myanmar.