The virtual meeting of the Financial Action Task Force (FATF) starting on Wednesday is very important for Pakistan. It will be decided that Pakistan will remain in its gray list or come out of it. In this meeting, it will be reviewed how successful Pakistan has been in stopping extremism funding and money laundering. The meeting will run until 23 October.
During the last few days, many countries, including India, were constantly on the lookout for this meeting and preparation in Pakistan. Many things came up in this regard, which also raised many questions. After all, to understand what these things are, the BBC has talked to some experts and has tried to understand them.
What is FATF and how does it work?
FATF is an international body, established in 1989 at the initiative of G7 countries. The headquarters of the institution is in Paris.
The main objective of this institution is to formulate policies to deal with money laundering happening around the world. However, after the attack on the World Trade Center, the purpose of stopping the funding of extremism was also included.
FATF included Pakistan in its gray list in June 2018.
The FATF reportedly attributed this to funding from Pakistan by organizations that are involved in spreading global extremism.
Soon after, Pakistan started taking action on extremist groups and raided their bases. Action was taken against Jamaat-ud-Dawa and his associates.
Jamaat-ud-Dawa chief Hafiz Saeed was arrested in July 2019 and he was tried in December this year.
Hafiz Saeed has been arrested and released many times before.
There was a cautious response from India on the arrest of Hafiz Saeed. Earlier, in 2008 and 2009, Hafiz Saeed had been arrested for his involvement in the Mumbai attacks but was later released.
What is a gray list?
The list of the organization in which Pakistan is included is called the gray list in the common language. However, FATF does not use any special terminology regarding this list.
Countries in the gray list are those where the risk of extremism funding and money laundering is highest, but they are ready to work with FATF to stop it.
The Asia Pacific Group (APG), an agency associated with FATF, monitors the country concerned in the matter of how serious it is about ending the funding and money laundering of extremism. There are currently 18 countries on the gray list.
Like APG, there are agencies related to FATF in Europe, South America, and other regions.
Apart from the gray list, there is also a blacklist of FATF. Where the countries in the gray list are willing to work with the FATF, the countries on the blacklist include those who do not try to prove that the charges against them are baseless. They do not even try to get out of these allegations. Currently, there are two countries on the blacklist - Iran and North Korea.
What is the importance of getting out of the gray list for Pakistan?
Pakistan needs to come out of this list. Pakistan has been accused since 2000 by providing financial assistance to extremists. India is eyeing the next meeting of the FATF and the United States is also closely monitoring the situation.
Pakistan Foreign Minister Shah Mehmood Qureshi has said from a news channel that Pakistan will be taken out of the list soon but he did not say anything about how soon it will be done.
In the past too, Pakistan has been on the gray list from 2013 to 2016. After satisfactory reports, Pakistan was removed from the list. Once again Pakistan is trying to work on the issues raised by FATF so that it can come out of this list as soon as possible.
The foreign investment to Pakistan is being adversely affected by being on the gray list. Apart from this, import, export, and the ability to borrow from international institutions like the IMF and ADB are also being affected.
Because Pakistan is heavily dependent on foreign aid for its economic condition, staying on the gray list is affecting the country's economy very badly. Staying on the gray list is also a serious obstacle for e-commerce and digital financing.
What has Pakistan done to come out of the gray list so far?
In February this year, the FATF said that Pakistan has stood on only 14 out of 27 parameters. But in September, many bills and amendments have been passed in the Parliament of Pakistan to stop money laundering and extremism.
Pakistan has strengthened the anti-extremism law to the standards of the UN Security Council. Apart from this, administrative and financial monitoring of public welfare institutions has also been increased in some areas.
Pakistan has made it more stringent by bringing changes in the prosecution process.
Diplomatic effort
Right now at least 12 out of 39 members need to be supported to come out of Pakistan and gray list.
India and its allies are trying to put Pakistan on the blacklist, but on the other hand, Pakistan's allies believe that despite limited resources, Pakistan is doing everything possible to crush extremism.
In September, China had expressed the hope that it would be in Pakistan's favor in the review meeting to be held in October.
What will happen at the meeting?
In this meeting, the report presented by APG will be reviewed. This report will be presented based on the steps taken by Pakistan. Under this, the laws made by Pakistan in this direction or the amendments made in the laws will also be reviewed.
In the meeting held in February, the FATF had said that Pakistan has stood on only 14 of the 27 parameters. The FATF gave Pakistan four more months to implement the remaining 13 conditions.
Based on these, the FATF will decide whether to keep Pakistan on the gray or blacklist. On October 11, APG in its review report has placed Pakistan in the 'enhanced follow-up list'. The APG had cited the reason behind this because of Pakistan's failure to stop money laundering and extremism.
It is not yet clear what effect this report of APG will have on the stay or exit in the gray list of Pakistan, but the Government of Pakistan is still hopeful from this meeting that they will be excluded from the gray list because the APG's The report, which has been given because of the situation till February.
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