Pakistan's FATF Delisting: A Milestone In Countering Terror Financing

Pakistan has been fighting the War on Terror on multiple fronts for more than two decades. One of those fronts has been terror financing. Pakistan's removal from the FATF grey list in October, 2022 was a major achievement in Pakistan's fight against terror financing.

This achievement was the result of untiring efforts and hard work to strengthen the overall anti-money laundering (AML) / counter-terrorist financing (CFT) framework over a period of four years. On the occasion of the delisting of Pakistan from the grey list, FATF's President Mr. Raja Kumar acknowledged Pakistan's progress by saying that“Pakistan has made significant improvements to strengthen the effectiveness of this framework for combating terrorism financing.” Mr. Kumar said steps had also been taken to strengthen risk-based supervision of financial and non-financial institutions, improve asset confiscation outcomes, and investigate and prosecute money laundering. In its official press release, FATF welcomed Pakistan's“significant progress” in improving its anti-money laundering and combating financing terror (AML/CFT) regime.“Pakistan has strengthened the effectiveness of its AML/CFT regime and addressed technical deficiencies to meet the commitments of its action plans regarding strategic deficiencies that the FATF identified in June 2018 and June 2021.

While on the grey list, Pakistan was subject to a very challenging and comprehensive action plan. It was also subject to dual evaluation processes of FATF with differing timelines. In light of the grey listing, Pakistan rigorously overhauled its entire legal system, exerting a focused institutional reform process and capacity building to handle terrorism financing. The government also thoroughly worked on strengthening the financial, regulatory, investigatory, judicial, and prosecution frameworks, as well as participation by the non-government sector. Pakistan made significant progress in addressing many legal loopholes and targeted militant groups of concern to FATF.

According to Dr. Antonio Giustozzi of the British think-tank Royal United Services Institute (RUSI) Pakistan has taken credible actions against many people and organizations. Hafiz Saeed, the head of Lashkar-e-Taiba, who was already detained was sentenced to another 31 years in prison. Pakistan has also been actively pursued the head of Jaish-e-Mohammad to enforce the arrest warrant against him. It completely cut funding to Lashkar-e-Taiba in April 2022, as confirmed by multiple sources within the organization. The threats faced by Pakistan as a result of its actions against militant organizations are reflected in the threatening words of one member of Lashkar-e-Taiba“...the Pakistani government and its army are touching explosive switches and these switches will destroy Pakistan if the government doesn't change its policy against the jihadist movement. [...] Daesh became an alternative organisation for the Pakistani jihadists; especially the Salafi and Ahl Hadith followers are increasingly interested in Daesh and its activities...'. This mentality of militant organization also explains the complex threats faced by Pakistan in its fight against terrorist organizations.

India has repeatedly accused Pakistan of involvement in terror financing, though Pakistan denies these claims and international bodies have not substantiated them. Given the shared threat of terrorism in the region, cooperation rather than confrontation between India and Pakistan could enhance regional security. Constructive engagement at multilateral forums like FATF may prove more effective than mutual accusations.

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