Shades of 'Grey' of FATF

Task "forced". Technicalized. Politicized. These are examples of vocabulary being used for the latest FATF decision of retaining Pakistan in grey list. The problem is that by FATF's own evaluations and statements Pakistan has done consistently well. By its own assessment Pakistan has fulfilled 95% of the requirement. By its own remarks Pakistan was given one of the most challenging plans. Despite all these acknowledgements Pakistan remains 'grey'. That raises a question of then what is white? That makes one wonder about what about other countries in white list who have more grey and black actions than Pakistan? That makes one look at the definition of grey. In fact, that makes FATF's evaluations a bit incomprehensible, or "coloured", or confusing, or "grey".

A classic example of the "grey" areas of FATF are the discriminatory treatment of India and Pakistan. FATF was scheduled to review India's money laundering and terrorist financing regime, a 10-year cycle, in September-October 2020. But, it has been tentatively postponed to January/ February 2021 apparently in view of Covid-19 pandemic in India. The year-long review will evaluate `Indian legal system against financial crimes at its plenary meeting in February 2022 and subsequently issue a statement and recommendation about the country. Covid-19 is a phenomenon world-wide. If the Pandemic was a reason of giving India time relaxation in terms of listing it, why has there been such a rigorous time-bound assessment of Pakistan's every action? If this is not grey, and coloured, nothing else is.

FATF is an intergovernmental organization founded in 1989 on the initiative of the G7, playing a central role in global efforts in combatting money laundering and terrorist financing. The Paris-based organisation has set global standards to combat terrorist financing. It also monitors a country's ability to prevent, detect, investigate and prosecute the financing of terrorism. The fact that it was a creation of G7 makes it limited. 7 of the richest countries in the world have set up an agenda for the rest of the 193 countries of the world. The agenda is to make sure terrorists do not have access to money they need to carry out costly terrorist operations. Understood. What is not understood is the selective way the countries are being evaluated, assessed, and listed. The main "grey" areas in the FATF listing are:

1. Grading levels- The criteria for risk assessment and the overall grading is a bit confusing. It needs clarification and standardization. What are the standard criteria that need to be met by all or any country to be listed 'white'? What level of compliance means that each criterion has acceptable compliance? Does largely compliant mean 90 or 80% compliance? If an individual compliance is acceptable and if it is largely compliant then how is 95% criteria compliance, as in the case of Pakistan, not acceptable? Are grading equivalences created for each colour? There are many other debatable points that need to be made more specific, more transparent and more measurable to increase the credibility of the FATF.

2. Comparative country assessment- The biggest "grey" area in FATF is the listing of countries. If you look at the criteria percentages given to various countries it gets stranger. For example, percentage of partially compliant and non-compliant status given to Pakistan is 20%. It has been ranked in the grey list. While Lithuania and South Korea are also scoring 20% yet are in the white list. Many countries, for example the US, has a high percentage of non-compliance but remains in the white list. This creates serious doubts on it being just a purely financial risk assessment body.

3. Duration of listing- Another subjective area is the term of listing. That they say depends on compliance speed. However, the 3 monthly review sometimes says that in the next review they will reassess and sometimes it is after three reviews. Case in point is Pakistan. The one point on which Pakistan has still to be compliant will now be reviewed after a whole year. This seems more arbitrary or designed than based on objective assessment.

Pakistan has to adopt a holistic approach to FATF. Yes, we must comply with the requirements but that is just the base. What is required is a more comprehensive 5th generation invisible strategy to deal with this complex issue.

1. Use information against disinformation- The visual, verbal and vocal assault against Pakistan by India and many others has been more lethal than the Agni missile. The latest revelation by the EU Disinformation Lab of the fake 750 websites Indian government was operating for 15 years to make Pakistan synonymous with terror proves Pakistan's vulnerability and lack of responsiveness in the past. Pakistan must expose India and its supporters. This campaign cannot be just a few statements but a dedicated specialized VIN (Virtual Intelligence Network) that anticipates the next digital attack and disarms it with a clever communication strategy. Pakistan played well on Indian false flag operation intent and proactively created such a buzz on it that India was forced to change course. Similar strategic placements on key digital platforms are required to expose Indian lies along with hammering upon the Hindutva fascism of Narendra Modi. Pakistan must approach FATF with Indian non-compliance of the rules. Uranium caught in India and the terror financing through Afghanistan as per the latest blast in Lahore make for a case that needs to be viral through our Virtual Intelligence Network.

2. Lobby with member countries- Similarly, we need to have a clear strategy on identifying the facilitators, the neutrals and the objectors who are influencing FATF. Our reliance on China and Turkey is good but limited. We must work on new lobbying tactics to convert neutrals into facilitators. That means that a series of economic and cultural diplomacy actions need to precede to create inter dependence before FATF support becomes feasible.

3. Leverage global need for countering black money laws- There is a reluctant realization in the West that like the pandemic there is no way black money brought into the country can remain non-infectious. President Biden has already issued an anti-corruption fight where money stolen from other countries needs to be curtailed. This is a theme that needs to be leveraged at all forums by Pakistan. Forums of third world countries like G77 need to raise a collective voice against the damage discriminatory listings of FATF do to the world financial system in the long run. The idea is to have a forum of "Black Money Virus" that includes the countries from where the money is stolen and where the money is stored.

For any institution or forum to have sustainable credibility there are three core principles. Fairness, Transparency and Merit. These are the foundations on which institutions become strong and enduring. FATF or any other forum needs to build on these 3 cores to remove the shadows of "grey" around it.

(The writer can be reached at [email protected])

Copyright Business Recorder, 2021