The Financial Action Task Force’s (FATF) International Cooperation Review Group (ICRG) has finalized its preliminary report regarding Pakistan’s progress on a 27-point action plan. The report will be presented in the committee’s next plenary meeting which is being held from June 21 to 25.
Pakistan’s performance was reviewed last week at a virtual meeting of the ICRG’s observer group, which includes the U.S., U.K., China, France, and India.
Pakistan was placed on FATF’s grey list in June 2018. The country was given a 27-point action plan to curtail money laundering and terror financing by the end of 2019. However, the deadline has been extended repeatedly over the last two years.
At the last review session in February, the FATF extended the deadline to June and decided to keep the country on the grey list.
“Pakistan remains under increased monitoring,” FATF President Dr. Marcus Pleyer said at a press briefing in February, adding that while Pakistan had made important progress, there remained some serious flaws in mechanisms to plug terrorism financing.
The Pakistani government believes it has made significant progress on these two issues over the last few months and expects to come off the grey list in the upcoming review session. “There is partial progress on the point of conviction. Relevant laws have been amended in this regard. Therefore, it is hoped that there will be good news for Pakistan at the FATF’s Plenary Session starting from June 21,” sources in Pakistan’s Ministry of Finance told Express Tribune.
What remains unclear is whether Pakistan has made enough progress in plugging loopholes in its diplomacy to win U.S. support for its case at the upcoming meeting. There is reason to believe that Islamabad will not get any respite from Washington at the FATF in the near future.
FATF’s next review session comes amid speculation that the U.S. is unhappy with Pakistan’s reluctance to allow American military bases on its soil after American soldiers exit Afghanistan. On the other hand, Pakistan’s push to win U.S. approval for its so-called new policy to pivot from hard power to economic power has not found any takers in Washington. Its hopes of diversifying its partnership with the U.S. by adding more economic value to the bilateral relationship doesn’t appear to be going anywhere.
In fact, Washington has accelerated efforts to remind Pakistan that it is its efficacy as a hard power that the U.S. seeks. The heightened bilateral engagement between the military leaderships of the two countries in recent months are indicative of this.
Going forward, the U.S. would want to maximize the multiple levers it has to pressure Pakistan. It will remind Islamabad that it needs U.S. support in places like the FATF. The U.S. may not have actively opposed Pakistan’s position at FATF so far, but it could do so now, as it attempts to retain leverage over Pakistan after its withdrawal from Afghanistan.
It is unlikely that FATF will remove Pakistan from the grey list on the basis of performance alone.
The timing in this regard could not have been worse as Islamabad faces a tricky situation. As much as Pakistan would like to offer military bases to the U.S. and use them to target its enemies in the region, the country cannot afford to anger its allies in the region, especially China. China would not like to see Pakistan hosting the U.S. military as this could result in the latter operating drones near China’s borders. Similarly, the Taliban doesn’t want anyone in Afghanistan’s neighborhood to offer the U.S. military bases.
The U.S.’ withdrawal from Afghanistan has increased Pakistan’s complications, with an impact on its case at the FATF. As of now, Pakistan’s focus would be to give its best performance in the upcoming preliminary session, but it is possible that we will see another deadline being handed to Pakistan, asking the country to report back.
Courtesy: THE DIPLOMAT