From UPSC perspective, the following things are important :
Prelims level : FATF
Mains level : Terror funding
The global terror financing watchdog, Financial Action Task Force (FATF) has asked Pakistan 150 more questions on the action it has taken against madrassas run as being undoubtedly the dreamland for major terror outfits of the world.
Pakistan and FATF
- The FATF has kept Pakistan on the Grey List until February 2020.
- In October, it had warned that Pakistan would be put on the Black List if it did not comply with the remaining 22 points in a list of 27 questions.
- Pakistan is required to show effective implementation of targeted financial sanctions against all UN designated terrorists like Hafiz Saeed, JeM founder Masood Azhar etc.
What is the FATF?
- FATF is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering.
- The FATF Secretariat is housed at the OECD headquarters in Paris.
- It holds three Plenary meetings in the course of each of its 12-month rotating presidencies.
Why is Pakistan under its scanner?
- Pakistan has been under the FATF’s scanner since June 2018, when it was put on the Grey List for terror financing and money laundering risks.
- FATF and its partners such as the Asia Pacific Group (APG) are reviewing Pakistan’s processes, systems, and weaknesses on the basis of a standard matrix for anti-money laundering (AML) and combating the financing of terrorism (CFT) regime.
- In June 2018, Pakistan gave a high-level political commitment to work with the FATF and APG to strengthen its AML/CFT regime, and to address its strategic counter-terrorism financing-related deficiencies.
- Pakistan and the FATF then agreed on the monitoring of 27 indicators under a 10-point action plan, with specific deadlines.
- The understanding was that the successful implementation of the action plan, and its physical verification by the APG, would lead the FATF to move Pakistan out of the Grey List.
- However, Islamabad managed to satisfy the global watchdog over just five of them.
And what will happen now?
- As of now, Pakistan must respond by January 8, 2020. And at the next FATF meeting in Beijing, Pakistan will have an opportunity to defend the points in the report.
- Pakistan will likely ask for another relaxation of the deadline, probably up to June 2020, pleading that the February deadline is too tight for it to ensure compliance with the remaining 22 action plans.
- If Pakistan is actually moved out of the Grey List, it will be placed on the Black List with Iran and North Korea.