Despite Indian efforts, Pakistan avoids being blacklisted for terror financing

  • Despite pressure from Indian to put Pakistan on the "black list", the Financial Action Task Force (FATF) decided to keep the country on the "grey list".
  • Pakistan has been given until October 2019 to implement a comprehensive plan to curb terror financing.
  • In the wake of the Pulwama attack, India has reportedly been pressuring the FATF to take strict action against Pakistan.

The Financial Action Task Force (FATF), an anti-money laundering and anti-terror financing monitoring body, has decided to keep Pakistan on its “ grey list”, instead of imposing harsher curbs on it. The FATF sets standards and assesses countries’ progress in preventing money laundering and curbing terrorist organisations’ access to finance.

In the wake of the Pulwama attack, India had reportedly been pressuring the FATF to take strict action against Pakistan. This could have resulted in Pakistan being placed on the FATF’s “blacklist”, which entails sanctions and comprehensive monitoring - a fate currently restricted to only Iran and North Korea.

India had said that the attack demonstrated Pakistan’s inability to curb terror financing. Jaish-e-Mohammad (JeM), a Pakistan-based terrorist outfit, claimed responsibility for the attack. India has accused the government in the past of enabling the JeM to carry out its operations.

While Pakistan recently reinstated a ban on Jamat-ud-Dawa, an organisation founded by JeM mastermind Haifz Saeed, and its charity wing, this seems to be a case of too little too late. India, meanwhile, feels that the move is largely a superficial one, and is aimed at placating the international community amid the FATF review.

In June 2018, Pakistan was put on the FATF’s grey list, for its failure to crack down on terror financing. Pakistan had earlier been on the watchlist from 2012 to 2015 for its inability to address the problem of money laundering. If it is unable to implement a 27-point plan to curb money laundering and terrorist financing activities within its borders, it is scheduled to be placed on the blacklist by October 2019.

If Pakistan is put on the blacklist, it will still suffer. The country will see demand from foreign investors drop and the rating of its sovereign bonds downgraded which will make it more expensive for the country to access credit.



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