Pakistan on watchlist for terror financing

Note4students

Mains Paper 2: IR | Important International institutions, agencies & fora, their structure, mandate

From UPSC perspective, the following things are important:

Prelims level: Financial Action Task Force, ICRG on terror financing, UN Security Council

Mains level: Terror financing by Pakistan and global opposition against it


News

Pakistan back on the “grey list”

  1. The Financial Action Task Force (FATF) Plenary has decided to put Pakistan back on the “grey list”
  2. This subjects it to direct monitoring and intense scrutiny by the International Co-operation Review Group (ICRG) on terror financing
  3. Pakistan had been on the same list from 2012 to 2015

Effect of this decision

  1. The move could see Pakistan face financial strictures, and ratings downgrades by international banking and credit rating agencies until Islamabad carries out a full crackdown on terror groups
  2. Pakistan will now be required to furnish a fresh report to the International Co-operation Review Group (ICRG), under a “Compliance Document”
  3. Accordingly, the country will undergo a review at the next Plenary in June, when it would be presented a full action plan on how it is expected to crack down on terror groups banned by the UN Security Council

International pressure to eliminate terrorism

  1. The move was pushed by four nominating countries, the U.S., the U.K., Germany, and France
  2. They had written to the FATF stating that even though Pakistan had an anti-money laundering/anti-terror funding regime in place, effectiveness of the implementation was inadequate

Back2Basics

Financial Action Task Force (FATF)

  1. The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member Jurisdictions
  2. The 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
  3. 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
  4. The FATF has developed a series of Recommendations that are recognized as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction
  5. The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally
  6. The FATF’s decision-making body, the FATF Plenary, meets three times per year
Foreign Policy Watch: Cross-Border Terrorism
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