Pakistan continues to face FATF blacklisting threat due to inaction against Hafiz Saeed-linked groups

  • After an FATF meeting last year, Pakistan was grey-listed in June 2018

  • Islamabad has been directed to fix the country's financial system, which FATF maintains poses a risk to the global network

  • Pakistan also faces the threat of being blacklisted by the European Union

Global terror financing watchdog, the Financial Action Task Force (FATF), is hosting its annual meeting between 17 and 22 February in Paris, a series of meetings critical for Pakistan. Led by the Secretary of Finance and the Director General of the Counter-Terrorism Department, Islamabad will have to explain how groups linked with globally-designated terrorist Hafiz Saeed function within the country, among other counter-terror glitches.

After an FATF meeting last year, Pakistan was grey-listed in June 2018, a move based largely on a US proposal that asserted that Pakistan lacked "strategic capabilities" to internally counter financing of terrorism.

When the 37-nation task force placed Pakistan on its grey list in June 2018, officials clearly informed Islamabad that it could be blacklisted if it failed to take concrete action to curb terror financing. This includes fixing the country's financial system, which FATF officials maintain poses a risk to global network. Pakistan, which does not have a mechanism in place to curb money laundering and terror financing, also faces the threat of being blacklisted by the European Union.

Pakistani government officials who participated in the FATF meetings reveal that the biggest concern of the task force is the status of groups affiliated with Hafiz Saeed.

 Pakistan continues to face FATF blacklisting threat due to inaction against Hafiz Saeed-linked groups

Representational image. Reuters

In November 2017, the Lahore High Court released Saeed — the mastermind of the 2008 Mumbai terror attacks and leader of the Lashkar-e-Taiba (LeT) — from house arrest, citing "insufficient evidence" against him. However, in February 2018, Pakistan amended the Anti-Terrorism Act, 1997, sanctioning a countrywide ban against groups and individuals that the United Nations has enlisted as terrorists, including Saeed. The fact that the move came a week before the FATF meeting can be construed as a Hail Mary to avoid the grey list.

While Pakistan officially banned LeT in 2002, its affiliated groups Jamaat-ud-Dawa (JuD) and Falah-e-Insaniyat Foundation (FIF) continue to function openly in the country, effectively making them fronts for the terror group. In July last year, when the JuD- affiliated Allaho Akbar Tehreek (AAT) contested the general elections, it had Saeed's images on its banners. AAT was the follow-up to JuD's political front, the Milli Muslim League (MML), whose candidates had participated in the by-elections preceding the July polls.

In September 2018, the Supreme Court of Pakistan had rejected the federal government's plea to restrain the fundraising activities of JuD and FIF. Projects affiliated with these groups include 300 seminaries, schools, hospitals, a publishing house and ambulance services. The court allowed both JuD and FIF to continue with their "welfare work" for the "benefit of the country".

FATF officials narrated these facts at a meeting with a Pakistani delegation in Sydney last month, government sources confirmed. At the meeting, the task force further underlined requirements that Pakistan needs to fulfil by May 2019 and September 2019 — the two windows during which Islamabad's status will be reviewed.

"Pakistan can't show any progress in time for February's meeting, but if we follow the template that the FATF has handed out, we could be in better shape later this year," noted an official who has been a part of Pakistan's delegation at these meetings with the FATF.

"However, action against Hafiz Saeed and his groups has been a concern repeated by FATF officials at all meetings since February last year, and we will have to show some progress in this month's meeting as well."

Officials further confirm that while Pakistan is facing a potential threat of being blacklisted, if Islamabad executes the FATF's plan, it actually stands the chance of going back to the white list later this year.

Former Finance Minister Salman Shah warned that FATF blacklisting could result in banking isolation for Pakistan. "The FATF has given clear guidelines with regard to how the banking system is manipulated by terrorist groups for money laundering purposes. It's time to ensure that all Pakistani banks have a mechanism in place to prevent undocumented transactions," he asserted.

Shah also believes that the sizeable cash economy in Pakistan makes it hard to regulate all transactions. "Most of the terror funding is carried out through cash transactions. That is one area that will take considerable time to be regulated."

Lieutenant General (retired) Talat Masood, former secretary of the Ministry of Defense Production, believes that the FATF's action against Pakistan is a result of false security policies. "It is evident that the (groups affiliated with Hafiz Saeed) are being mainstreamed into Pakistani politics. That is why the international trust is gradually declining. TheFATF's repeated warnings are a result of that."

Meanwhile, Hafiz Saeed-affiliated groups are confident that their support for the separatist freedom movement in Kashmir will ensure that Islamabad doesn't take stricter action against them.

"We are working for the people of Pakistan through charities, and we are simultaneously raising our voice for the people of Kashmir. Only those who want to take action against us are working on American and Indian agenda," claimed Ehsan Ullah, finance secretary of the JuD-affiliated MML.

The author is an Islamabad-based freelance journalist and a member of 101Reporters

Updated Date: Feb 19, 2019 12:51:35 IST