Nawal Zahra Bukhari
FATF was initiated by the G7 — to combat illicit funding and hinder finances that could be used for financing terror around the globe. However, now the organization is sanctioning countries without stating any probable reasons for One can argue that it has been misused by the global powers to forward their political goals. FATF also works with governments to establish regulations that combat illicit funding in countries. FATF has put only two countries on the blacklist (North Korea and Iran) however, the grey list is filled with many – mostly Muslim countries.
One can argue that the global watchdog is also used as a political tool as recently it has included UAE into its grey list despite it being a global hub for investment from around the globe.
WHY DOES FATF PUT COUNTRIES ON THE GREY LIST?
FATF enlists countries in its grey list when they represent a greater risk of illicit funding but commit to working to address their AML/CFT deficiencies. Every country that is under the grey list as of now is subjected to increased monitoring directly by the FATF or by FATF-style regional bodies (FSRBs).
Recently two Muslim countries have been added to the FATF grey list – Turkey and UAE. According to the officials, Turkey was added to the list because FATF was concerned that its neighbors ( Syria, Lebanon, Iraq, and Iran) can be a threat to terror financing within the region. The officials also cited that Turkey has made significant progress from the initial 2019 MER that was held to address these issues but the global watchdog would like to further evaluate its progress. However, it still remains on the grey list with Pakistan and several other nations.
On the other hand, UAE is added to the increased monitoring list as of March 2022. The reasons seem vague but the monetary body cited that UAE has made significant progress after the February 2022 assessment – but the decision to put FATF in the grey list was based on the risk factors that UAE can facilitate illicit findings in the foreseeable future. This is why they are still monitoring UAE’s progress to analyze how things pan out.
The recent development is a major blow to the reputation of the state as the UAE is hosting the Dubai Expo 2022 right now and serves as an economic hub for people around the globe. On top of the reputation blow, the increased monitoring by the FATF will discourage the inflow of investment in the country (another major blow to the country). Unlike Pakistan, the implications of UAE being on the grey list will not be as distressing but it will surely affect the state in expanding its economic horizons in the future.
UAE is committed to working consistently to rule out all the risk factors listed by the FATF including prosecutions and identifying sanctions evasion at a global level.
However, this does not take away from the fact that the UAE will face a major blow because of this decision. As Pakistan has also been working closely with FATF but the state is still on the grey list – which is a cause of concern for UA
Is FATF a political tool?
According to a report by TRT World- FATF has been used by the west to harbor their political goals. When we analyze the recent decisions of the G7 led watchdog – FATF is being harsh at some countries while showing extreme leniency to others. A pertinent example of this can be the fact that FATF put UAE under the grey list while being lenient towards SaudiArabia when we know that The Saudi kingdom has been financing a war in Yemen.
Pakistan has also been under severe scrutiny by the FATF – despite fulfilling 30/34 targets given by the global watchdog – Pakistan remains on the grey list. The non-compliance ratio of Pakistan towards FATF’s decisions is just around 12.5% meanwhile France and New Zealand stand at 25% and 30% respectively while US itself is 22.5% non-compliant, Japan – 27.5%, and China is at 22.5%.
Pakistan’s Foreign Minister Shah Mehmood Qureshi also commented on this dilemma and mentioned that:
“Manipulating an important technical forum for narrow political designs against Pakistan is disgraceful but not surprising for the Modi government.”
Similarly, the case of Turkey also places ambiguities on FATF being a fair contender. Turkey has been quite vocal about their stance on IIOJ&K – this can be a reason why they are being scrutinized along with other countries like Pakistan and Iran.
Hassan Shad, a lawyer based in the Middle East says that “If they were fair in their treatment of all the countries, they would have put the UK in the FATF grey list”
These mounting opinions by analysts add to the fact that FATF is not just a tool to combat illicit funding rather it has been repeatedly used as a political tool to scrutinize nations that do not fall in line with the West. The dual-standards over grey and black-listing are viable indicators in this regard.
