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US underscores FATF implementation remains uneven in Pakistan

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By Iman Malik

The U.S. State Department released its Congress-mandated Annual Country Reports on Terrorism on November 1, 2019. These reports delineate the global terrorism milieu and offer comprehensive country assessments on terrorist trends and features how the United States and its allies made efficient strides to thwart, thrash, and degrade global terrorist organizations in 2018. This includes an assessment on Pakistan and their efforts to counter the actions of terrorist groups.

According to the Pakistani Ministry of Foreign Affairs (MoFA), Pakistan is disappointed with assertions made in the U.S. Department of State’s Country Report on Terrorism 2018, concerning its counter-terrorism efforts. MoFA raises concerns that the report entirely overlooks the factual on-the-ground situation, and Pakistan’s tremendous contributions and sacrifices rendered over the last two decades in the Global War on Terrorism (GWOT). According to MoFA, the counterterrorism efforts have not only ensued in eliminating Al-Qaeda from this region but have also made the world a safer place. Pakistan reiterates its resolve to take tangible measures under its National Action Plan (NAP).

The report snapshots that civilians, journalists, community leaders, security and law enforcement, governmental, non-governmental, and diplomatic officials in Pakistan remained primary terrorist targets in 2018. The Tehrik-e-Taliban Pakistan (TTP), Jamaat-ul-Ahrar (JuA), Islamic State’s Khorasan Province (ISIS-K), and the sectarian group Lashkar-e-Jhangvi al-Alami (LJA) conducted attacks inside Pakistan, killing and injuring hundreds. The State Department’s designated terrorist groups located in Pakistan, but conducted attacks outside the country, included the Afghan Taliban, the Haqqani Network (HQN) and Lashkar-e-Taiba (LeT) and its affiliated front organizations, and Jaish-e-Mohammed (JeM).

Concurrently, the report acknowledges that the Government of Pakistan (GOP) made concerted counterterrorism efforts that decreased the number of terrorist attacks and fatalities in previous years. The institutional, legislative, law enforcement, and border security measures played significant roles in thwarting terrorist attacks. More specifically, “to disarm, disrupt, kill, and apprehend terrorists” — the military, paramilitary, and the Intelligence Bureau (IB), which has nationwide jurisdiction and is empowered to coordinate with provincial counterterrorism departments (CTDs), conducted major counterterrorism operations throughout Pakistan. Moreover, Pakistan’s Ministry of Interior (MoI) has more than 10 law enforcement-related entities under its administration.

The U.S. State Department recognizes that Pakistan continued to implement the Anti-Terrorism Act, 1997, the National Counterterrorism Authority (NACTA) Act, 2013, the Investigation for Fair Trial Act, 2013, and 2014 Amendments to the Anti-Terrorism Law. All of these enabled a unified state response to counterterrorism and enhanced law enforcement and prosecutorial powers for terrorism cases. The ant-terrorism law allows for preventive detention, permits the death penalty for terrorism offenses, and creates special Anti-Terrorism Courts.

Notably, Pakistan is a member of the Asia/Pacific Group on Money Laundering (APG) — a regional body, affiliated with Groupe d’action financière (GAFI), commonly known as the Financial Action Task Force (FATF), has agreed to adopt, implement, and enforce internationally accepted standards as set out in the ‘FATF Recommendations’ and has made resolute efforts to combat money laundering, terrorist financing, and proliferation financing.

Pakistan criminalizes terrorist financing through the Anti-Terrorism Act; however, the report underscores that implementation remains uneven. In June 2018, the FATF formally placed Pakistan on its “grey list” due to ‘strategic deficiencies’ in its anti-money laundering (AML) and combating the financing of terrorism (CFT) regimes, specifically citing concerns over Pakistan’s failure to fully implement UN Security Council ISIL (Da’esh) and Al Qaeda sanctions regime.

The US report echoes international terror financing watchdog FATF’s observation that UN-designated entities, including LeT and its affiliates were neither effectively forbidden from raising funds in Pakistan nor were they being denied financial services. While Pakistan’s laws technically comply with international AML/CFT standards, the “authorities failed to uniformly implement UN sanctions related to designated entities and individuals such as LeT and its affiliates, which continued to make use of economic resources and raise funds.” Pakistan has committed to addressing these concerns as part of an agreed FATF Action Plan.

The Pakistani government failed to significantly limit Lashkar-e-Taiba (LeT) and Jaish-e-Mohammed (JeM) “from raising money, recruiting, and training in Pakistan – and allowed candidates overtly affiliated with LeT front organizations to contest the July general elections,” according to the country reports.

Although the Pakistani government voiced support for political reconciliation between the Afghan government and the Afghan Taliban, it did not restrict the Afghan Taliban and the Haqqani Network (HQN) from operating in Pakistan-based safe havens and threatening U.S. and Afghan forces in Afghanistan. The country report on Afghanistan details a fraction of the terrorists’ incidents that occurred between January to November 2018, included VBIEDs and complex attacks by the HQN and ISIS-K that involved multiple attackers wearing suicide vests to target ANDSF, Afghan government buildings, foreign governments, polling centers, journalists, and soft Afghan and international civilian targets to include international organizations.

Pakistan’s major coordinated state retaliation, the 2015 National Action Plan (NAP) to combat terrorism, includes efforts to prevent and counter terrorist financing, including by enhancing interagency coordination on countering the finance of terrorism. The law designates the use of unlicensed hundi and hawala systems as predicate offences to terrorism and requires banks to report suspicious transactions to Pakistan’s FIU, the State Bank’s Financial Monitoring Unit.

The Hawala system, a catalyst for money laundering and terrorist financing is an alternative remittance system (ARS), based on trust which subsists and channelizes covert banking, supports illicit circles and is being used both by terrorists and money launderers to move their money to avoid detection and reportage. The country report says that “these unlicensed money transfer systems persisted throughout the country and were open to abuse by terrorist financiers operating in the cross-border area.”

Furthermore, the State Department canvasses Pakistan’s Countering Violent Extremism (CVE) efforts. In November 2018, Prime Minister of Pakistan, Imran Khan’s government announced that it would review and potentially revise NACTA’s composition and operations. Before this, NACTA’s CVE work adhered to the National Narrative to Counter Violent Extremism, finalized in 2017. The Ministry of Information and Broadcasting (MoIB) and the Pakistani military’s Inter-Services Public Relations department devised strategic communication (STRATCOM) to build support for the military’s counterterrorism initiatives.

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The government collaboratively operated five deradicalization camps that offered “corrective religious education, vocational training, counseling, and therapy.” An NGO administered deradicalization camps, which partner ups with the Pakistani military, focusing on juvenile terrorists and juvenile violent extremists. The Pakistani cities of Nowshera, Peshawar, and Quetta constitute a stronghold of madrassah network.  There were continued reports that some madrassahs taught an “extremist” doctrine. Enhanced government supervision of madrassahs is a covenant of the National Action Plan, and the US report found evidence of continued government efforts to increase regulation of the sector. As some madrassah reformists and security analysts observed, many madrassahs’ failure to register with the government or to provide documentation of their sources of funding, or to limit their acceptance to foreign students with valid visas, a background check, and the consent of their governments, as required by law.

Pakistan also augmented international regional cooperation and participated in the South Asian Association for Regional Cooperation (SAARC) meetings on counterterrorism and in other multilateral fora where counterterrorism cooperation was discussed, including the Global Counterterrorism Forum (GCTF), the Shanghai Cooperation Organization [as an observer], the Heart of Asia-Istanbul Process (HoA-IP), and the Association of Southeast Asian Nations Regional Forum.

In riposte to implementation gaps in the report, Pakistan has taken extensive legal and administrative measures for the implementation of its obligations under the UNSC 1267 sanctions regime for the freezing of assets and denial of funds and economic resources to all designated entities and individuals and is committed to fully implement the FATF Action Plan, MoFA’s press release states.

The US report encompasses the counterterrorism efforts from 2018, but it does not incorporate the momentous developments and the counterterrorism measures Pakistan has espoused in the past 10 months, especially under the leadership of Prime Minister Imran Khan, the country’s newest premier who has vowed to eradicate terrorism and work towards promoting peace and stability in the South Asia region.

Pakistan sees the insinuations made in the US report as unwarranted and inconsistent with the positive trajectory of the bilateral relations. However, the United States has a comprehensive legal and institutional role in FATF to ascertain which nation-states are involved in money-laundering and terrorist financing. To overcome implementation predicaments, Pakistan must collaborate with the U.S. to enhance her compliance with AML/CFT measures, improve legal, institutional, regulatory and supervise frameworks for investigating and prosecuting money laundering and terrorist financing offenses.

Iman Malik is an International Security and Defense Policy expert based in Washington D.C.

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