FATF Duplicity & Indian Heinous Agendas Vis-à-vis Pakistan

Financial Action Task Force (FATF) following its plenary meeting in October 2021 retained Pakistan’s grey list status despite fulfillment of 30 of 34 assigned action plans while extending the period till the forthcoming FATF meeting in February 2022. The announcement once again raised serious questions regarding the credibility of the global financial watchdog that has failed to justify its decision vis-à-vis Pakistan. Notwithstanding the FATF fresh decisions, constraints and challenges, Pakistan has effectively dealt with the challenges of money laundering and terror financing issue. It has carried out a comprehensive reformative measure to consolidate surveillance, monitoring, and accountability. In particular, during the worst global pandemic crisis of Covid-19, it kept its ambitions and goals intact for addressing this alarming challenge.

Ironically, the country remains on the grey list despite having sacrificed around 80,000 lives and suffering the economic loss of $150 billion after joining the US-led war against terrorism. Over the years, it has proactively carried out legal reforms and necessary policy changes to pursue the full-scale compliance of the FATF aspirations from Pakistan. Furthermore, it has expressed readiness to cooperate with the global watchdog to ensure domestic transparency and accountability in the future. Despite its comprehensive efforts, the FATF approach towards Pakistan is objectionable and rigid. It has given an impression of projecting the narrative of the actors that tend to push Pakistan into the Blacklist status.

Evidently, no other state in the world has exhibited as much commitment to meet the FATF compliance protocols as has Pakistan. From regulation of domestic laws to international cooperation, Pakistan’s effort to combat the menace of money laundering remain exemplary.  At the domestic level, different national institutional agencies-The NACTA, FIA FBR, State Bank of Pakistan, and the Securities and Exchange Commission of Pakistan have done a commendable job to ensure enhanced surveillance over money laundering and terror financing activities in the country. Likewise, NACTA has taken radical measures to further robust counter terrorism measures through developing an integrated strategy for addressing the plausible vulnerability of Terror Financing and Money Laundering all across the country at the regional and provincial level. One of the major successes that Pakistan has attained in its aligned principles to FATF is the successful adoption of proscribed UNSCR resolutions 1267/1989/1988 and UNSCR 1373 through two drafting of two different reformative measures. Pakistan gives domestic effect to UNSCR 1267 by issuing Statutory Regulatory Order (SROs) following an update to listings by the UN. Despite recent improvements in implementing UNSCR 1267 without delay, there are numerous instances where SROs were issued several days after changes to listing at the UN; Pakistan has banned the proscribed 66 entities and approximately held 7,600 individuals. Apart from that, it has passed several laws to strengthen the process of accountability and check on the money processing inflow and outflow respectively.

In the financial sector, Pakistan established two-fold technical compliance with FATF proposals, and crucial enhancements that are required for the viable execution of preventive measures. Most banks and economic corporations successfully apply record-keeping prerequisites and have risk-based arrangements and procedures. Banks and ECs implement interior controls and have AML/CFT compliance officials, screen new staff, and have ongoing training programs and inward review capacities. Apart from this, the current government has been emphasizing the various reformative and constitutional reforms to ensure the FATF protocol compliance at its fullest. Prime Minister Imran khan was fully determined to uproot the menace of black money and terror financing from the country to ensure a transparent mechanism. The World Bank conducted a mutual evaluation on Pakistan, based on FATF’s assessment guidelines. The 218-page report lists in detail the steps that had already been taken by Pakistan till then in respect of prevention, criminalization of money laundering, and terrorist financing. The evaluators of that particular report acknowledged the government of Pakistan for their remarkable commitment to the assessment of the FATF.

Most banks and ECs successfully apply record-keeping prerequisites and have risk-based CDD arrangements and procedures. However, a critical inadequacy is their absence of compelling recognizable proof of beneficial proprietors during the CDD cycle. Banks and ECs implement interior controls and have AML/CFT compliance officials, screen new staff, and have ongoing training programs and inward review capacities. Somewhat, these controls are sabotaged by a helpless level, or need, of comprehension of ML/TF chances. Pakistan has revamped its adequacy of laws and regulations regarding non-profit organizations also banned those identified as being vulnerable to terrorist financing abuse. Furthermore, it has passed various laws and legislation at the federal and provincial levels to avert the risks of ML and Terror Financing.

The aforementioned efforts reflect cooperative behavior and sincere intention on part of Pakistan for regional peace and manage the crisis ensuing regional terrorism. Nevertheless, those efforts were declared insufficient by the FATF. Therefore, it can be reasonably questioned as to what mechanism is used for assessing Pakistan’s compliance status to the FATF protocols. What are the probable challenges that Pakistan face in the complete implementation of the FATF points?

One of the major impediments is India’s politicization that undermines the technical processes and spirit of the FATF. Following the FATF decision against Pakistan in October 2021 the Indian External Affairs Minister S. Jaishankar confessed to influencing the FATF to keep Pakistan on the “grey list” which raised serious questions on the integrity of the watchdog. In this regard, the Indian news agency ANI quoted Jaishankar on Sunday as saying; “Due to us, Pakistan is under the lens of FATF and it was kept in the grey list.”  “The Indian statement not only exposes its real face but also vindicates Pakistan’s longstanding stance on India’s negative role in FATF.”  India’s manipulation of FATF for heinous political designs against Pakistan is not only disgraceful but also renders the FATF a mere political tool to serve the vested interests of some countries.  As a test case, India attained favorable leverage from the FATF while Pakistan has always been treated harshly despite its utmost commitment to support the envisioned agenda for combating the money laundering and terror financing from the region.

Notwithstanding Indian heinous crimes and non-compliance of the FATF protocols, the FATF has exhibited indifferent attitude instead of placing it in the blacklist.  For instance, The US Treasury Department’s Finance Crimes Enforcement Network (FinCEN) charged MT/TF/FF exposed the engagement of Indian state-owned banks in the heinous malpractices of ML and TF to the mercenaries and militant insurgents in the region. FinCEN has exposed the involvement of at least 44 Indian banks linked to transactions of $2 trillion used in facilitating and financing acts of terrorism that went unchecked by the FATF or its affiliated bodies. In this reference, the FATF providing special exemption to Delhi due to western economic interests with India clearly shows its Prejudice. The comprehensive report reveals that the majority of the Indian banks are covertly engaged in illegal money transactions. In this regard, 2000 illegal transactions amounting more than $1billion were made between the years 2011 to 2017. It is percipient to mention that during this period FATF put Pakistan twice in the grey list status despite little to evidence to warrant such a biased decision. On the other hand, Indian involvement in such heinous crimes was deliberately ignored by the FATF. Furthermore, there are also reports of the involvement of Union Bank of India, and State Bank of India in suspicious transactions in foreign states such as the UK and Canada.

One of the major impediments is India’s politicization that undermines the technical processes spirit of FATF. Following the FATF decision against Pakistan in October 2021 the Indian External Affairs Minister S. Jaishankar confessed to influencing the FATF to keep Pakistan on the “grey list” which raised serious questions on the integrity of the watchdog.

Those shreds of evidence designate Indian banks in the illegal transferring of money. This trail of money laundering was further exposed when the UN published a report that revealed the sponsorship of insurgent grips in the state of Karnataka, Kerala, and Assam. Likewise, massive suspicious money scams were exposed during the Indian premier league that went unnoticed by the international watchdogs. Also, the 10 Indian banks are rated as the worst-performing banks out of 15 by the S&P Global market. After the FinCEN report, the Indian accusations against Pakistan regarding the terror sponsorship becomes redundant, but as far as Indian appraisal or security for its money laundering involvement is concerned, the FATF is yet to mark a step. The deliberate ignorance of the Indian case is purely a discriminative approach while pushing harder against Pakistan is utter political bias of the FATF body.

A report on another Indian driven global scam was published by EU DisinfoLab, which uncovered a worldwide network of fake media outlets, think tanks and NGOs serving Indian interests are concrete evidence of Indian involvement in propaganda warfare. While the evidence of fake outlets and financial sponsoring of such illicit agencies and entities by India worldwide for the past fifteen years not only validates Pakistan’s rhetoric of Indian sponsored militant insurgency,  it was also responsible for undermining Pakistan’s efforts to combat  money laundering and terror financing. The FATF is yet torespond to this globally exposed and condemned massive propaganda warfare by India despite  serious pieces of evidence of the ML/TF.

Another important aspect, in the last fifteen years, the Indian regional TF campaign was not only confined to Pakistan, but in fact it pumped 3 billion dollars into Afghanistan fueling the war machine through its intelligence agencies, in particular the RAW. The US Foreign policy magazine highlighted Indian sponsorship of  Daish for promoting regional terrorism. The magazine makes it crystal-clear that- Indians, for the most part, appearing in attacks in Afghanistan and limited numbers on the battlefield in Syria. The attack on the prison in Jalalabad follows the earlier decision by ISKP to use an Indian fighter to attack a Sikh gurdwara—a place of worship—in Kabul.

Adding further, Indian state sponsored terrorism against Pakistan is widely known to the world. In June 2015, the Indian Prime Minister Modi, during his visit to Bangladesh openly admitted that India was involved in the activities to destabilise Pakistan. He expressed his views that India had no regrets for assisting Mukti-Bahini Movement for creating Bangladesh. This assertive mindset further contemplated time and again carrying out terror financing activities inside Pakistan through Baloch Separatists and TTP respectively.   India has been funding terrorism for a very long period duly managed by Kulbhushan Yadav through Indian state sponsored terrorist financing violating international money laundering laws.  This alarming trend can be further appraised by the statement of Indian Prime Minister Narendra Modi and his Defence Minister is on record threatening Pakistan of teaching it a lesson through destabilization of Baluchistan and thereafter RAW agent was arrested in Baluchistan and he has confessed for spying and acts of terrorism duly financed by Indian Government under Indian Prime Minister Narendra Modi. Furthermore, it is on record that India also transferred funds to Kulbhushan Yadav – the agent of RAW who was caught red-handed on 25th March 2016 while spying and financing terrorist acts in Pakistan and he was using these funds channeled through fake business concerns via covert Indian establishment based abroad for intelligence gathering for Indian agencies and had been working in Baluchistan at the behest of RAW.

FATF also persistently ignored Indian nuclear terrorism threats over the years. Pertinent to mention that 18 nuclear material’s theft and lost incidents reported in India from 1994 to 2022 involving over 200 kg of nuclear material. The theft of over 200 kilograms of nuclear material over the last two decades in India poses a serious threat of nuclear terrorism, necessitating action by the global powers to address poor safety standards in the country.

China and Pakistan, the countries neighboring India, have been calling for strengthening regulations following repeated incidents of theft of nuclear material in India but FATF turned a blind eye towards Indian ploys that poses serious human security threat.

Such incidents have raised concerns about India, which has emerged as a potential hotspot in the illegal trade of nuclear technology and materials vital for a malicious nuclear supply chain for state and non-state actors.

To conclude, with such vindicated true evidence, the FATF’s ignorance of the Indian involvement remains a grave area of concern and it also questions the sanctity of FATF towards treating states differently, notwithstanding their protocols of objectivity and rationality. This dubious behavior has dented the sanctity of institution.  Therefore, it must introspect its policy operation module to ensure rationality. There is no doubt Pakistan deserves favorable concessions for its utmost efforts to combat the global menace of illicit transactions of money and terror financing.



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About Mushahid Hussain Naqvi 22 Articles
The author is the Digital Editor at The Asian Telegraph and sub-Editor at Melange International Magazine and Research Associate at COPAIR with academic expertise in International Relations.