FATF ‘grey-list’ less vital in Pak than dirty cash flight: UK report

FATF ‘grey-list’ less vital in Pak than dirty cash flight: UK report

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Including Pakistan in the ‘grey-list’ of the Paris-based Financial Action Task Force (FATF) in June 2018 over terror financing is seen in the country as a political act and less vital than the flight of corrupt cash abroad, a new report by a leading think-tank said on Friday.

Titled ‘Security through financial integrity: Mending Pakistan’s Leaky Sieve’, the report by the Royal United Services Institute (RUSI) says the country’s international engagement on financial crime issues at the government-to-government level has largely been at cross-purposes.

Focussing on various aspects of Pakistan’s financial system, including the illegal ‘hawala/hundi’ system of money transfer and the role of Dubai, the report based on a series of interviews and workshops in London and Pakistan, says Islamabad faces several challenges.

“The focus of the FATF on counterterrorist financing in Pakistan is seen as a foreign preoccupation that unjustly obscures the issue of greatest relevance to Pakistan itself, namely the proceeds of corruption siphoned off outside the country”, the report by Tom Keatinge and Anton Moiseienko says.

After the FATF officially announced Pakistan on the ‘grey list’ in June 2018, from the next month the country has also been included on the European Union’s list of high-risk third countries that pose a significant threat to the EU’s financial system.

Pakistani interviewees widely view the FATF’s decision as politically motivated and at the same time damaging to the country’s reputation, report says, adding that despite the perceived injustice, they acknowledge the need to engage with the FATF process.

“When the research team suggested that improving Pakistan’s financial crime defences dovetails with Pakistan’s anti-corruption agenda, several interviewees agreed but argued that the FATF’s focus on CTF (counter terror financing) in Pakistan obscured the issue that was of greatest relevance, namely the proceeds of corruption siphoned outside the country”, it says.

Finance minister Arun Jaitley said earlier this month that India wants Pakistan to be further downgraded to FATF’s ‘black-list’. In February this year, FATF said Pakistan “does not demonstrate a proper understanding” of terror financing risks posed by militant groups and persons affiliated with the Taliban.

The UK, the report says, is seen as an enabler of corruption in Pakistan, partly as a consequence of high-profile cases such as that of Nawaz Sharif and Asif Ali Zardari, both of whom own UK-based real estate.

“More broadly, there is a palpable feeling that the UK is a favoured destination for dirty funds from Pakistan, and that UK law enforcement would be able to reverse the situation if there were sufficient political will to do so”, the report adds.

One interviewee evoked the metaphor of a leaky sieve (Pakistan) and a bucket where the water flows (UK), the report says, adding that in interviewees’ view the only reason why Pakistan is a leaky sieve in the first place is the availability of attractive destinations for dirty funds.__Hindustan Times

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