FATF, Terrorism and Pakistan

What is the news?

• Nearly five years after he was released on bail in the 26/11 Mumbai attacks case, Lashkar-e-Taiba (LeT) operations commander Zaki-ur-Rahman Lakhvi was arrested in Pakistan by its Counter Terrorism Department (CTD) on charges of using terror funds.
• The timing of the arrest is significant as it comes ahead of meetings of the global watchdog Financial Action Task Force (FATF) and its Asia Pacific Joint Group (APJG, which will consider Pakistan’s “greylist” status, meant for countries “under increased monitoring”.
• Lakhvi is accused of running a dispensary using funds collected for terrorism financing. He and others also collected funds from this dispensary and used them for further terrorism financing and for personal expenses.
• The statement added that Lakhvi’s offences were compounded by the fact that he is on the United Nation’s Security Council list of banned terrorists, and thus cannot have recourse to any funds without special clearance.
• However, Indian officials questioned the seriousness of the action, saying it had become routine for Pakistan to showcase arrests of key terrorist figures just before FATF meetings.
• The arrest of LeT founder Hafiz Saeed in July 2019 came three months before a FATF plenary session was due to decide on downgrading Pakistan to the ‘blacklist’ or “High-Risk Jurisdictions” that face severe financial sanctions.
• Pakistan has been retained on the greylist but faces blacklisting if it fails to complete a 27-point action plan to curb terror financing and money laundering.

Financial Action Task Force (FATF), 1989

• It is an intergovernmental body established in 1989 by G7 Summit in Paris.
• Secretariat is at OECD HQ in Paris. It is a 39-member body. India is a member of FATF.
• Purpose

1. It was established initially to combat money laundering.
2. Later in 2001 it added terrorist financing and
3. In 2012, added proliferation of weapons of mass destruction.

• The FATF is a “policy-making body”.
• The objectives of the FATF are
  1. To set standards and promote effective implementation of legal, regulatory and operational measures
  2. For combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
• Grey/ Black Listing of Countries
  1. Out of 39 countries, 18 countries are on Grey List. Iran and North Korea are black listed. Pak is in Grey List.
  2. Pakistan to remain in the Grey List of FATF. FATF blacklists Iran on Blacklists.
  3. IMF doesn't give loans to Grey and Black list of FATF.

Pakistan and FATF

• FATF to keep Pakistan on a grey list to monitor its record against terror financing.
• 27 Point Action Plan - is not completed by Pakistan. Pakistan needs to tighten security and restrict banking services to block loopholes and take action against terrorists.
• UNSCR 1267 is not being fully implemented. It is a list of people associated with Al Qaeda or the Taliban.
• If it doesn’t fulfil the criteria by February 2020, it will be on the black list.
• China, Turkey and Malaysia are supporting Pakistan, hence can’t be blacklisted.