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With US help, India overcomes opposition from China, pushes FATF to ask Pakistan to do more to freeze assets of Lashkar and JuD.

New Delhi: The Financial Action Task Force (FATF), the global watchdog that combats terrorism financing, has put Pakistan back on a three-monthly reporting cycle after concluding Islamabad had not done enough to freeze the assets of terror outfits such as Lashkar-e-Taiba and Jamaat-ud-Dawa.

The decision taken at the Buenos Aires plenary of the FATF Thursday is seen as a significant achievement for Indian diplomacy as it required the watchdog to push back pressure from China – which has considerable influence in the Asia Pacific Group, the regional affiliate of FATF – to let Pakistan off the hook.

The final decision at the FATF plenary, which ended Friday, requires Pakistan to give an action taken report on LeT, JuD and Falah-i-Insaniyat foundation at the next plenary which is held three times in a year.

The Asia Pacific Group or APG, conveyed to the plenary that Pakistan could be given a break and assessed directly in 2019 when its turn comes up for country evaluation, ThePrint has learnt.

India objected, saying Islamabad has done little to get a two-year reprieve and that it should be put on 90-day reporting to the International Cooperation Review Group of the FATF. New Delhi also wanted Falah-i-Insaniyat foundation included in the list.

This provoked a major diplomatic stand-off with China backing Pakistan. India worked closely with the US and was supported by Russia, Britain, Germany, France and Israel, among others, Indian government sources told ThePrint.

The confrontation was over accepting the APG position or putting Pakistan back on 90-day reporting. The APG can, however, only suggest to the FATF, which as the global financial watchdog on terror funding and money laundering activities, takes the final call on placing a country on a watchlist and later on a gray list of high risk jurisdictions.

The FATF follows an elaborate process to assess compliance, based on which it issues public statements on countries with deficiencies. Countries on this gray list are practically treated like pariahs in the international financial system. North Korea, Iran and Uganda are examples of some ‘jurisdictions’ that keep struggling within this list.

The economic and commercial consequences of such gray-listing can be quite debilitating. Pakistan is not yet on the list but by being put back on 90-day reporting, it’s on watch for compliance and that in itself is quite a challenge for Islamabad.

Pakistan faced a similar risk last year when the APG had found measures taken by Islamabad inadequate. One of the first actions that the Trump administration took in January was to summon the Pakistani ambassador and inform him of the consequences this could lead to.

This action resulted in the Pakistani government placing Hafiz Mohammed Saeed under house arrest. The FATF plenary in February took note but asked Pakistan to submit another report to the APG. Pakistan protested and then rallied support with the active help of China to get a positive outcome within the APG.

As a result, Pakistan did not have to do additional reporting and was hopeful to get off the hook at the Buenos Aires plenary of the FATF. But that effort failed in the face of massive pressure by India and the US.

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