From UPSC perspective, the following things are important :
Prelims level : FATF
Mains level : Terror funding
- Pakistan escaped for the moment from the black list of the global Financial Action Task Force (FATF) that acts against terror financing in the world.
Implications of the event
- It reinforces Delhi’s critics, who believe Pakistan can’t be “isolated” even if its army brazenly violates its international legal commitments on fighting terrorism.
- Criticism arises from the fact that the government had mounted a sustained campaign in the last few years to apply the existing international norms against money laundering and terror financing on Pakistan.
- It puts countries on notice and seeks time-bound compliance with a range of FATF benchmarks.
- If countries fail to comply, they get on to a blacklist that calls on nations to take additional measures against financial transactions involving Pakistan’s jurisdiction.
- At the moment, only two countries are on the blacklist — Iran and North Korea.
Pakistan and FATF
- Pakistan was first put on the grey list in 2012 but got off it in 2015 when the FATF and its procedures caught India’s serious political interest.
- The intense Indian effort resulted in Pakistan being put on the grey list again in 2018.
- FATF acknowledged that Pakistan is in full compliance with only five of the 27 benchmarks Islamabad had to address.
- The FATF has issued a stern warning to Pakistan that it could get to the black list if there was no progress by February 2020.
Limitations of FATF
- There is no guarantee that Pakistan will pay the price four months down the road.
- FATF is a multilateral mechanism where bilateral political considerations do impact on the outcomes. Pakistan can thank China, Turkey and Malaysia, whose support helped it escape the black list.
- There is nothing to suggest that the Pakistan policies of the three countries might change any time soon.
- India’s effort has generated international pressure on Pakistan Army’s support to cross-border terrorism.
- Sustaining the international mobilisation also turns harsh light on China who talks about opposing terrorism and improving ties with India but refuses to walk the talk.