Pakistan Government in a Bind Over FATF’s Calls For Action
The Pakistani Government is racing to approve multiple bills to prevent money laundering and terrorist financing—and fulfill a 27-point plan of the global watchdog Financial Action Task Force (FATF). With 13 remaining conditions and an eye on the mid-October deadline, Pakistan hopes to avoid a demotion from the FATF’s grey list to the black list, joining countries such as Iran and North Korea.
Over the last two years, Pakistan has made progress by fulfilling fourteen of the criteria required by the FATF, such as developing an integrated database at airports for enhanced coordination across financial, administrative, and law enforcement agencies, and establishing successful outreach and regulatory safeguards aimed at countering terrorist financing within the country’s financial sector.
In recent months, Pakistan has taken some major steps under the plan, by which the country will allow no foreign currency transactions without a national tax number and ban currency changes of up to $500 in the open currency market without the sides submitting a copy of their identification documents.
Anti-Money Laundering Bill
Pakistan’s parliament, on 16 September, passed an anti-money laundering legislation, which was a key demand from the FATF.
According to the Anti-Terrorism Act (Amendment) Bill, 2020, the investigating officer, with the permission of the court, can conduct covert operations to detect terrorism funding, track communications and computer system by applying latest technologies in 60 days.
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In addition to the money laundering bill, Pakistan has also proscribed several militant groups and seized their assets, including Jamaat ud Dawah and Jaish-e-Mohammad – the groups blamed for several terrorist attacks such as the 2009 deadly Mumbai attacks killing over 150 people.
Earlier in 2020, an anti-terrorism court sentenced Hafiz Mohammad Saeed, the chief of the Jamaat ud Dawah, to 11 years in jail in two terror-financing cases – a development widely seen as an attempt to woo FATF members.
Assets of Banned Organisations Frozen
Pakistan’s provincial home departments have frozen 964 properties of proscribed outfits Jamaat-ud-Dawa (JuD) and Jaish-e-Mohammad (JeM), under the United Nations Security Council (Freezing and Seizure) Order, 2019 issued by the foreign affairs ministry.
A total of 611 properties of JuD were frozen in Punjab, followed by 108 in Khyber-Pakhtunkhwa, 80 in Sindh, 61 in ‘Azad’ Jammu & Kashmir, 30 in Balochistan and 17 in Islamabad Capital Territory.
Similarly, eight properties of JeM were frozen in Punjab, 29 in Khyber Pakhtunkhwa, 12 in ‘Azad’ Jammu & Kashmir, four in Islamabad Capital Territory, three in Sindh and one in Balochistan.
The frozen properties of the JuD include 76 schools, four colleges, 330 mosques and seminaries, 186 dispensaries, 15 hospitals, 262 ambulances, a funeral bus, three disaster management offices, 10 boats, 17 buildings, a plot, an agricultural land and two motorcycles.
The properties of the JeM frozen by the government include 53 mosques and seminaries, two dispensaries and two ambulances.
About the FATF
The FATF, an inter-governmental body, was established in 1989 on the initiative of G7—a coalition of the world’s most developed economies – to develop policies to combat money laundering. Currently, it has 39 members. The FATF plenary that meets thrice a year, can monitor money laundering and terror financing anywhere in the world involving any country and make recommendations.
According to the FATF, it monitors the progress in implementing necessary measures, reviews money laundering and terrorist financing techniques and countermeasures and promotes the adoption and implementation of appropriate measures globally. In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.
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In the FATF back-listing is referred to as “Call for action” which is a shorthand for the Task Force’s description of “Non-Cooperative Countries or Territories. “(NCCT). While the “grey list” is formally called the “other monitored-jurisdictions.” Pakistan has been in this list for over seven years, in two phases. It was put on the FATF grey list from 2012 to 2015 and then again from 2018 up till now. The blacklist makes it very difficult for a country to get international aid and funding that Pakistan desperately needs. And though the list gets updated regularly, its two virtually permanent members are Iran and North Korea.
Challenges Ahead
The FATF found that Pakistan lacks the necessary mechanisms to ensure that taxpayer money is not going to terrorist organizations, and that Islamabad was unable to monitor cash flow to these groups.
Pakistan’s status on the FATF grey list inevitably impacts the country’s ability to attract foreign investors. This is incredibly important in the current economic climate of the pandemic where there are serious barriers to economic growth globally. Moreover, Pakistan’s grey list status could impact imports, exports, remittances, and its ability to borrow money from international lenders, such as the International Monetary Fund (IMF) and the Asian Development Bank (ADB) in the near future.
Way Forward
Pakistan has since twice escaped being placed on the watchdog’s financial crime blacklist with the support of Turkey, China, and Malaysia. According to the FATF charter, a country must have the support of at least three member states to avoid blacklisting.
To avoid being blacklisted by the FATF, Pakistan will have to demonstrate the effectiveness of sanctions including remedial actions to curb terrorist financing in the country; it will have to ensure improved effectiveness for terror financing of financial institutions with particular to banned outfits.
Pakistan Admits to Dawood’s Presence
For the first time Pakistan has admitted that India’s most wanted terrorist Dawood Ibrahim, is residing in Pakistan. The admission came in a list of 88 banned terror groups disclosed as part of its efforts to wriggle out of the Financial Action Task Force (FATF) financial sanctions. The Pakistan government has imposed tough financial curbs on 88 banned terror groups and their leaders including the 26/11 mastermind Hafiz Saeed, Jaish-e-Mohammed chief Masood Azhar and underworld don Dawood Ibrahim.
The Pakistani government issued two notifications on August 18 announcing sanctions on key figures of terror outfit. Ibrahim is among the 88 terrorists listed in a Statutory Regulatory Order by Pakistan’s Ministry of Foreign affairs. Dawood’s details are provided under serial no. QDi.135, as in the UNSC list of sanctions, and gives out all his details including his passport numbers, and address in Clifton, Karachi.
The notifications imposed sweeping sanctions, including an assets freeze, arms embargo, and travel ban on the on key figures of terror outfits such as the Jamaat-ud-Dawa (JuD), JeM, Taliban, Daesh, Haqqani Group, al-Qaeda, and others as part of Pakistan’s efforts to avoid being blacklisted by the FATF.
On August 23, the Pakistan Foreign Ministry issued a statement expressly stating that the SROs (Statutory Regulatory Orders) issued reflect the information contained in the list entry of UN designated individuals/entities. It said the reports in certain sections of the media about Pakistan imposing new sanctions measures, through these SROs, were not factual.
Pulwama Attack Perpetrators Charged
On 25 August 2020, the National Investigation Agency (NIA) filed a 5,000-page charge-sheet in a special NIA Court in Jammu, naming Jaish-e-Mohammed (JeM) chief Masood Azhar and his brother Rauf Asghar as the masterminds behind the terror attack of 14 February 2019.
On 14 February 2019, a Central Reserve Police Force (CRPF) convoy came under attack by a suicide bomber, employed by Pakistan-based Jaish. Terrorist Abdul Ahmad Dar rammed the convoy on Srinagar highway triggering an explosion and leaving 40 soldiers dead.
The 13,500-page long charge-sheet identifies 19 people for carrying out the attack at Pakistan’s behest. Six of the 19 have been eliminated, seven have been arrested. At large are the three brothers across the border and three local terrorists. The charge-sheet is replete with evidence (phone calls, recordings, WhatsApp chats and photos) to incriminate the accused in the attack.
The Charge-sheet details how Pulwama attack was a result of a well-planned criminal conspiracy hatched by Pakistan-based leadership of terrorist organization Jaish-e-Mohammad.
The NIA charge-sheet reportedly names 20 accused, including some key Jaish-e-Mohammad conspirators:
• Adil Ahmed Dar. the suicide bomber who rammed the CRPF convoy.
• Umer Farooq. Jaish commander who oversaw the execution of the attack and who assembled the bomb used in the attack. He was killed in an encounter in March 2020 along with another bomb-making expert, Kamran.
• Shakir Bashir Magrey. He allegedly drove the car used in the attack but got off around 500 meters from the attack site. He was also involved in procuring materials and in monitoring the movement of security convoys.
• Mohammed Iqbal Rather. He facilitated transport to pick up Pak-based terrorists and brought them into Kashmir.
• Bilal Ahmed Kuchey. Allegedly procured high-end mobile phones for Jaish, one of which was used to record a video as Adil Ahmed Dar slammed his vehicle into the CRPF convoy.
This was the chronology of the attack. Mohammed Umer Farooq infiltrated in India in late 2018 from the Sambha sector in Jammu region and took over as Jaish-e-Mohammad commander of Pulwama. RDX was brought by the Pakistani terrorists who infiltrated into India, and was stocked by another accused, Shakir Bashir, at his house for making the IED in January 2019. Farooq, along with his Pakistani friends, planned and prepared for the attack on security forces using IEDs. Shakir Bashir, Insha Jan, Peer Tariq Ahmad Shah and Bilal Ahmad Kuchey provided all logistics and sheltered the JeM terrorists in their houses. Sajjad Ahmad Bhat purchased a Maruti Eeco car for the purpose of carrying out the IED attack,which was driven by Bashir initially before he handed it over to Dar. Towards the end of January 2019, Mohammad Umar Farooq, Sameer Dar and Adil Dar made the propaganda video clip of the suicide attack at Insha Jan’s house which was released immediately after the attack.
