By Praveen Swami
February 17, 2017
Islamabad’s failure to choke the funding of
jihadist groups like the Lashkar-e-Taiba and Jaish-e-Muhammad will be discussed
at a five-day meeting of the Financial Action Task Force (FATF), an
international consortium against terror financing, set to begin in Paris on
February 19, diplomatic sources told The Indian Express. The meeting could lead
to the initiation of steps that would lead to greater scrutiny of
Pakistan-origin transactions across the global financial system.
Last month, Pakistan submitted a report to
the FATF, listing steps it had taken against terror financing and outlining its
plans to bring the country into compliance with the United Nations Security
Council Resolution 1267, which obliges member states to impose sanctions
against designated terrorist groups.
The United States and India, diplomatic
sources said, are expected to mount pressure at the FATF meeting by producing
evidence that the Lashkar and Jaish continue to openly operate in Pakistan,
running political front-organisations and charities that advertise their
fundraising activities online and on the streets.
“It is unlikely that there will be any
immediate action as a consequence of the meeting,” said a senior diplomatic
official, “but there’s certainly going to be mounting pressure on Pakistan to
get its house in order, because patience is wearing thin in many capitals.”
Earlier this month, an investigation by The
Indian Express revealed that the Lashkar was using proxy bank accounts to raise
funds in US dollars for projects in both Pakistan and overseas.
Islamabad’s report to the FATF, sources
said, argues that the country cannot take harsh steps against jihadist groups
like the Lashkar, which have a large domestic membership, for fear of provoking
a widespread backlash that would destabilise the nation. However, the report
promises that Islamabad will continue to slowly squeeze their operations.
Hafiz Muhammad Saeed, the head of the
Lashkar and its parent political arm, the Jamaat-ud-Dawa, was placed under
house arrest last month, though no criminal charges have been brought against
him. The Jamaat-ud-Dawa’s offices in several areas now bear new billboards
proclaiming them to belong to an organisation called the
In a February 2015 statement, the FATF said
it had removed Pakistan from a list of countries which were subject to ongoing
monitoring, saying the country had “established the legal and regulatory
framework to meet its commitments in its action plan regarding the strategic
deficiencies that the FATF had identified in June 2010”.
However, the FATF statement noted that
Pakistan was obliged to continue working with the FATF’s Asia-Pacific Group,
“as it continues to address the full range of AML/CFT (Anti-Money Laundering/
Countering Financing of Terrorism) issues identified in its mutual evaluation
report, in particular, fully implementing UNSC Resolution 1267.”
The core issue that has emerged in 2015-16,
diplomatic sources said, is that Pakistan has failed to comply with its
commitment to implement Resolution 1267, which obliges countries to freeze all
financial assets that could aid listed entities.
Although Pakistan shut down over 2,000 bank
accounts linked to the Lashkar, little cash was recovered from these accounts,
leading to fears that the account-holders had been tipped off in advance. India
and the US have both said that Lashkar-linked military training camps also
continue to operate in Pakistan-occupied Kashmir.
Islamabad has battled the FATF over its
Anti-Money Laundering/ Countering Financing of Terrorism laws since 2008, when
the organisation issued a statement saying “financial institutions should be
aware that the remaining deficiencies in Pakistan’s AML/CFT system constitute a
ML/FT vulnerability in the international financial system”.
New Delhi, a senior Ministry of External
Affairs official said, believes major countries, ranging from the US and
European Union members to Australia, have been excessively indulgent of
Pakistan’s slow progress in implementing past commitments.
The country was lauded in 2014, for
example, for putting in place a new ordinance that allowed it to freeze and
seize terrorist assets. The statement, however, referred only to United Nations
Security Council Resolution 1373, which does not specify the persons or
entities that should be listed, instead giving member-states discretion to
blacklist all those deemed necessary to “prevent and suppress the financing of
Following two years of diplomatic
intervention by India, FATF statements took note of the failure to meet its
obligations under Resolution 1267 —the issue the country is faced with now.
FATF, made up of 36 members from the
developed countries along with eight regional affiliates who mirror its work
and implement its recommendations, has no formal authority under international
law. However, countries that have figured on its blacklist have often found