FATF Grey Listing: Ramifications for Pakistan

M. Fazal Elahi

Pakistan’s print and electronic media has, over the past more than a week, been rife with speculations pertaining to Pakistan being placed on the ‘grey list’ of the Financial Action Task Force (FATF). Denials and assertions from relevant quarters, vis-à-vis this grave issue, too have been equally potent.

To be able to better appreciate the crux of the whole issue one must know what FATF is all about. Without knowing what FATF is and what is its mandate one would be simply beating about the bush and drawing wrong conclusions. The Financial Action Task Force (FATF), for the information and knowledge of the keen readers, is an inter-governmental body. It was established in 1989 by the Ministers of its Member jurisdictions.  The spelled out objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.  The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

Placing Pakistan in the grey list of the Financial Action Task Force (FATF) is, as reported, being forcefully backed by none other than Pakistan’s seven decades old, not so dependable ally, the United States of America (USA). The aggressive posture that the US has recently taken against Pakistan, particularly due to the ongoing war on terror, is conspicuously known to the entire world. In spite of having done more than it was  required to do and having dreadfully suffered the wrath of terrorism  more than any other country of the world, Pakistan continues to be untenably asked by the US and its western allies to do more. Not only this, Pakistan is also being blamed for its alleged involvement in financing the terrorists and providing cover to the terrorist safe havens in the country.   

The charges being levelled against Pakistan by the US and its allies are indeed very serious and excruciatingly agonising. There isn’t any iota of truth in what the US is holding Pakistan responsible for. At least that is what Pakistan has repeatedly and vociferously refuted. Regardless of America’s claims relating to the issues cited above, it would be in the interest of Pakistan to deal with this serious matter on war footing; completely wipe out terrorist safe havens, if any, from its soil, put a comprehensive ban on all terrorist outfits, and freeze bank accounts of all organizations found involved in this heinous crime.

Pakistan cannot afford to show any laxity in addressing this critical matter. The US, as always, is ever ready to tighten the noose against Pakistan’s neck because of obvious reasons; of them establishing India’s hegemony in the region is the topmost. The US is hell bent on making Pakistan bend on its knees, become subservient, and out-and-out follow not only the diktat of the US but also of India which it keenly desires to emerge as a regional power. For the attainment of this gruesome objective the US is ready to go beyond all limits. It is ready to use all options available to gag Pakistan. The latest option it has found to contain Pakistan is through the good offices of the Financial Action Task Force (FATF). FATF’s ominous posture against Pakistan is not without the blessings of the US. Placing Pakistan on the grey list for money laundering and other unproven issues is not without prejudice. It is being reported that FATAF will place Pakistan on its grey list sometime in June this year. What would be the impact of this drastic measure on the part of FATF on Pakistan’s economy? Different people have different opinion about this issue of grave concern.

To a point raised in the National Assembly of Pakistan, Miftah Ismail, Advisor to the Prime Minister for Finance said Pakistan is expected to be placed on the grey list of FATF in June, adding that Pakistan will remain in that list for six to twelve months. According to him, this measure will not have any adverse impact on Pakistan’s economy. Contrary to this, lawmaker Dr. Shireen Mazari expressed her doubts and said that foreign transactions, overseas remittances, overall economy, and credibility of the country will be harmed if it is placed on the grey list of FTAF, concerns that were quashed by the PM’s Finance Advisor.

Some experts on Pakistan’s economy are expressing the fear that the country may suffer a risk of downgrade by multilateral lenders such as IMF, World Bank, ADB and also a reduction in risk-rating by Moody’s, S&P and Fitch, according to an. As a result, the Pakistani stock market is expected to fall significantly. They are of the view that being in the “grey list” means that accessing funds from international markets, for instance, would become tougher for Pakistan.

Who is right and who isn’t is beside the point. The fact, as stated by an eminent English daily of the country, remains that the FATF decision would be a major setback for Pakistan’s efforts to improve its image. Undeniably, the matter is of immense significance and concern. Burying our heads in the sand like an ostrich will certainly not make the predator (FATAF) abstain from doing what it is contemplating to do against Pakistan. If this ostensibly critical issue is not addressed quickly and effectively it could potentially move Pakistan from grey to the black list of FATAF. If this happens, the ramifications could be devastating. Those at the helm in the country must appreciate the gravity of the situation. They must act promptly and prudently to steer the country out of this mess before things go out of hand and irreparable damage is caused to the country’s economy and image.

— The writer is freelance columnist based in Islamabad-Pakistan.