The geopolitics of Pakistan’s 2018 greylisting by the Financial Action Task Force
| DOI | 10.1177/00207020211016481 |
| Date | 01 June 2021 |
| Author | Abdur Rehman Shah |
| Published date | 01 June 2021 |
| Subject Matter | Scholarly Essay |
Scholarly Essay
The geopolitics
of Pakistan’s 2018
greylisting by the
Financial Action
Task Force
Abdur Rehman Shah
Department of International Relations, National University of Modern Languages, Islamabad,
Pakistan
Abstract
This article argues that, in addition to the valid reasons for Pakistan’s greylisting by the
Financial Action Task Force (FATF) in 2018, geopolitical dynamics also played a crucial
role behind this development. While the United States (US) under the Trump admin-
istration pushed Pakistan to seek an end to “the longest war” in Afghanistan, India,
hoping to curb cross-border terrorism, capitalized on this momentum to pressure
Pakistan. In order to hastily greylist Pakistan, institutional procedures of the FATF
were thus disregarded. The case study demonstrates how economic coercion was
used to push Pakistan to accept US and FATF demands. This article argues that
Pakistan’s greylisting has created a win-for-all scenario for now. But these gains
should not be overrated. Pakistan’s implementation of FATF requirements faces signif-
icant structural limitations. Still, the consensus between major actors underscores the
potential of the FATF to counter money laundering and financing of terrorism globally.
Keywords
Financial Action Task Force, Pakistan, greylist, counterterrorism, geopolitics, United
States, India, blacklist
Corresponding author:
Abdur Rehman Shah, Department of International Relations, National University of Modern Languages, H-9/4
Islamabad, 45000, Pakistan.
Email: arrehmans.ars@gmail.com
International Journal
2021, Vol. 76(2) 280–297
!The Author(s) 2021
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/00207020211016481
journals.sagepub.com/home/ijx
In February 2018, the Financial Action Task Force (FATF) placed Pakistan on
the roster of “jurisdictions under increased monitoring,” often referred to as the
“greylist.” It was the second time in six years that the country was put on this list.
One of the main reasons for this return to the list was that Pakistan was unable to
implement a comprehensive anti-money laundering and combating financing ter-
rorism (AML/CFT) regime that the country was bound to enact under FATF
commitments after its removal from the list in 2015. However, the decision to
greylist Pakistan in early 2018 had important procedural limitations. The FATF
guidelines for listing of any country involve a lengthy “review process.”
Accordingly, for the purpose of review, a nominated country with deficiencies in
its AML/CFT regime has at least a “one-year Observation Period” to address its
strategic flaws.
1
After this stage, if a country fails to improve its AML/CFT defi-
ciencies, the FATF moves to include the relevant country in its public statements
in the form of a blacklist or greylist. In the case of Pakistan’s greylisting,
2
not only
was this procedure sidestepped but the discussion about Pakistan was raised twice
in a single plenary. Under normal procedures, the case of any particular country is
subjected to discussion (and voting) only once during a single FATF plenary. But
that practice was disregarded in the case of Pakistan.
Even if the FATF had valid reasons to put Pakistan on the greylist, the timing
and method of the decision were largely shaped by geopolitical dynamics involving
the United States (US), India, and China. In other words, the geopolitical imper-
atives of major powers trumped the rules and principles of the FATF in this case.
The US under the Trump administration had two reasons to push for Pakistan’s
greylisting. First, Washington had long resented the subversive role of the
Pakistan-based Haqqani Network (HQN) in Afghanistan as well as the freedom
of movement and activities of the key leadership of Jamaat-ud-Dawah (JuD).
Second, listing Pakistan was important for the ultimate success of Trump’s
Afghanistan strategy, which was based on negotiations with the Taliban and with-
drawal of US troops from the country. On the other hand, India, which has per-
sistently strived to isolate Pakistan, seized the opportunity to mount further
pressure on Pakistan. The US and India prevailed upon other relevant powers
(e.g., the United Kingdom (UK), France, China, and Saudi Arabia) to form an
alliance within the FATF so as to place Pakistan on the greylist.
The article bases its thesis on the concept of “economic coercion.” The punitive
measures related to greylisting and blacklisting function as economic coercion to
bring about the desired changes in the AML/CFT approach of the concerned
country. As such, this essay argues that the FATF—in addition to its manifest
role of AML/CFT—has been an instrument of great powers’ interests and
1. Financial Action Task Force (FATF), “High Risk and Other Monitored Jurisdictions,” Paris, 2020,
https://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/more/more-
on-high-risk-and-non-cooperative-jurisdictions.html?hf=10&b=0&s=desc(fatf_releasedate)
(accessed 19 June 2020).
2. Editorial Staff, “Alone at FATF,” Dawn, 25 February 2018, https://www.dawn.com/ news/1391593
(accessed 25 August 2020).
Shah 281
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