Pakistan in co-operation with the FATF, will have to finalise an action plan by June to counter deficiencies in its financial system with respect to the financing of terrorism.
If this is not completed, then Pakistan will be put on a watch list by the FATF.
This will significantly increase regulatory scrutiny of Pakistan-related transactions and increase transaction costs for the external sector in that country.
An increase in costs and in the risk profile of Pakistan-related transactions will impose significant economic pain, and raise incentives to fix terror financing within the Pakistani system.
What is the role of India in this move?
According to Initial reports Pakistan’s usual backers China and Saudi initially supported Pak in FATF.
But this support petered out when a second and unscheduled vote was called by the US.
Even though the move has been led by the US, India made a strong diplomatic efforts through its sustained pressure on leading countries to act on terror.
India’s diplomatic offensive has progressively demanded greater accountability from Pakistan for its actions, or lack of them, against the spread of terror.
India also plans to use its moves to ensure China and Saudi Arabia do not abandon their current position on Pak over demands of FATF.
What are India’s diplomatic initiatives on counter terrorism?
Indian government has claimed success to its efforts with regard to addressing terrorist threats to national security.
India announced an Indo-Canada bilateral framework on countering violent extremism, as was an institutionalised dialogue between the national security advisors of the two countries.
India included the crucial clause that no country should allow its territory to be used for terrorist and violent extremist activities.
Peace and reconciliation in Afghanistan also a goal of India alongside the “dismantling of infrastructure of support to terrorism from across borders of Afghanistan”.
