Pakistani Prime Minister Imran Khan. Photo: AFP/ PTI
An aide to Pakistani Prime Minister Imran Khan has been accused of hiding a family business empire overseas. Photo: AFP / PTI

Pakistan’s caretaker government will submit 11 proposals for tightening up counter-terrorism actions during discussions with a global money-laundering watchdog, but may need to do more to avoid being formally blacklisted.

A delegation from the Financial Action Taskforce’s Asia Pacific Group (FATF-APG) was due to arrive Monday to monitor progress in meeting 40 recommendations for suppressing terrorist financing. Pakistan was placed on a “gray list” in February for its inaction on the issue and could face a further downgrade if the submissions fall short.

Expected to stay one week, the delegation will be told that Pakistan plans to improve coordination between domestic and global agencies monitoring money-laundering and the financing of terrorism, beef up reporting standards and enforcement — including prosecutions — and keep terrorists out of non-profit organizations.

FATF-APG will probably want more specific commitments, including a crackdown on groups affiliated with Hafiz Saeed, a globally-designated terrorist, whose high profile was one of the main criticisms raised by FATF in earlier meetings. In response, Islamabad passed the Anti-Terrorism Ordinance of 2018, which gave groups designated as international terrorists the same status in Pakistan for the first time.

Follow-up steps included the transfer of ambulances run by Falah-e-Insaniyat Foundation, the closure of Jamaat-ud-Dawa’s offices and  transfer of madrassa (Islamic seminaries) to provincial governments.

The delegation’s visit could not have come at a worse time, as Pakistan is still making the transition to a government led by Pakistan Tehrik-e-Insaf following last month’s general election, and well-placed sources in the government told Asia Times Islamabad had struggled to prepare a report for FATF-APG due to delays in the handover.

“The caretaker government was expecting the Pakistan Tehrik-e-Insaf government to deal with the FATF delegation, because its annual visit usually takes place in September,” an official said. “Also, when they were informed that the delegation was due to visit in mid-August, even then it was expected that the new government would’ve taken over by then.”

Sources in the government said that Islamabad had struggled to prepare a report for FATF-APG due to delays in the handover

Despite the confusion, it is likely a meeting will be arranged between the delegation and Asad Umar, who is expected to be finance minister in the new government. Public officials also said they were confident that enough steps had been taken over the past couple of months to satisfy the FATF.

Among these is a memorandum of understanding between the Securities and Exchange Commission of Pakistan and the National Counter Terrorism Authority to curb money laundering and terrorism financing.

“The memorandum of understanding will enable both oversight institutions to collaborate, cooperate and coordinate to effectively carry out their respective statutory responsibilities for implementation of anti-money laundering and combating the financing of terrorism regime and maintain the highest level of oversight quality, while minimizing duplication of efforts,” the Securities and Exchange Commission of Pakistan stated.

Outgoing finance minister Rana Afzal Khan, who led the preparation of the document submitted in February, believes that the decision to put Pakistan on the grey list was “more political than technical”.

“There wasn’t any objection raised over the State Bank of Pakistan financial scrutiny system [in the February meeting]. We’d incorporated all the improvements that they had suggested. How we were scrutinizing foreign madrassa funding was shared in detail,” Khan told Asia Times.

“The grey-listing was only a political decision, because on technical grounds we had responded to all the questions raised,” he added.

But with the Hafiz Saeed-affiliated Allaho Akbar Tehreek contesting last month’s elections, officials are aware that the FATF delegation’s focus will be on how these groups continue to flourish in the country.

“They campaigned for the election and took part in them as well, but this happened after us, during the interim government,” Khan said.

‘The grey-listing was only a political decision, because on technical grounds we had responded to all the questions raised’ 

“[Hafiz Saeed] backed candidates participated in the elections, and played an important part in defeating the Pakistan Muslim League (Nawaz) – because that vote bank was ours, actually and this was manipulated by the army to defeat us. So obviously we are bitterly against these groups.” Khan has also served as an army officer.

The former economic advisor to the prime minister, Miftah Ismail, who headed the Pakistani delegation in February’s meeting with FATF, said Hafiz Saeed’s groups had constantly been a part of  discussions with the terror watchdog. FATF questionnaires also focused on the three entities – Lashkar-e-Taiba, Jamaat-ud-Dawa and Falah-e-Insaniat Foundation – that come under Saeed’s umbrella.

“We took over all of Hafiz Saeed’s assets, we put a travel ban on him, seized his licenses – but of course we can’t kill him!” said Ismail. “Plus I also feel that Hafiz Saeed is fond of becoming a television celebrity:  he barks more than he bites. It’s important to note here that Hafiz Saeed was always India’s problem, but now the US is heavily involved as well.”

Ismail also said that while the world accuses Pakistan of providing a safe haven to militants, the problem actually runs a lot deeper.

“We strengthened the interior ministry under Ahsan Iqbal because [his predecessor] Chaudhry Nisar wasn’t doing much. We made the National Counter Terrorism Authority the central body and streamlined the reporting process – because many times in the past, things were being done properly but it was never reported,” he said. “Internationally we are accused of harboring militancy – the Good Taliban, bad Taliban policy – but even if one overlooks that, we are incompetent as well.”

Ismail said while the army leadership traditionally controlled security policies, it also allowed jihadist groups to become mainstream, with  affiliates of banned outfits contesting last month’s elections. He said Pakistan Muslim League (Nawaz) will cooperate with Pakistan Tehrik-e-Insaf to ensure that proper action is taken against militants.

“It doesn’t matter if it’s us, the caretaker government, Pakistan Tehrik-e-Insaf’s government or Pakistan People’s Party. The Pakistan Tehrik-e-Insaf government will follow through with what we had agreed on – here we are united. [Our leaders in] the Senate and National Assembly will completely cooperate with the government.

“I think now there’s a broad-based consensus that we need to get out of this mess, because we realize that the world is functioning at a completely different frequency,” Ismail added.