Though the Financial Action Task Force (FATF) has retained Pakistan on the Grey List after its five-day plenary session in Paris, the international anti-money laundering watchdog has warned Pakistan of taking prompt action to check money laundering and terror financing. The FATF is conceived as a leading international body for combating money laundering and terrorist financing. It has issued 40 recommendations and regularly checks whether member states have implemented them into their national law. The temporary relief that is given to Pakistan is by no means a win-win situation for us in so far as the FATF-policy challenges constantly hover over our economic future. Pakistan managed to escape being blacklisted and has been asked to meet the standards set by the international watchdog Financial Action Task Force (FATF). Pakistan has made progress towards money laundering and terror financing and we acknowledge these steps taken by the new government. Pakistan has until February to improve its counter-terror financing operations in line with an internationally agreed plan or face actions against it, Xiangmin Liu, the chairman of the Paris-based Financial Action Task Force (FATF), told a press conference on Friday. “The FATF strongly urges Pakistan to swiftly complete its full action plan by February 2020,” the body said in a statement. “Otherwise, should significant and sustainable progress not be made across the full range of its action plan by the next Plenary, the FATF will take action.” Economically, Pakistanis facing pressures from three different but interlinked levels – APG, the IMF and the FATF – that would determine the country’s possible exit from the FATF grey list. Given significant progress on its 10-point action plan on 27 different standards, Pakistani authorities expected to secure a couple of months of grace period to be fully compliant, but February next year is the deadline. As for the FATF policy mechanism-cum-implementation, there appears a marked difference among the core FATF member states (and the so-called “G7″ states) in implementing the international ”AML” requirements with respect to the legal profession. Some of the European states are implementing it aggressively; others (mainly North American) are repeatedly found non-compliant. This divergence in making compliance is remarkable as it occurs amongst states that are otherwise similarly committed to, and are the progenitors of, the global AML regime. And yet undeniably, the discourse in the academic and practising legal community largely construes this compliance divergence as reflective of the states’ level of commitment to the rule of law. This demand for cooperation only intensifies when attempting to track money designed to fund terrorism, which has been a central goal of FATF since 2001. Flexible and informal networks of terrorists could adapt relatively easily if caught. Moreover, many terrorist operations require relatively small amounts of money. In a system designed to track the millions, or even billions, of dollars involved in drug-trafficking, transactions in the tens of thousands or even below easily fall below the radar. As with the mainstream financial system, most transactions sent through hawala financial systems are perfectly legitimate transactions. By forming an anti-money laundering cell in the NAB headquarters- Islamabad has profoundly bridged the gap existing between FATF’s established international law on Combating the Financing of Terrorism (CFT) and Pakistan’s domestic law on accountability Therefore, the sensitive challenge is to separate the desirable from the undesirable without quashing the market entirely. This linking of AML to security politics also raises the degree of politicization around AML, especially given the contentious politics being played in the post-War on Terror era. Arguably put, lawfare is the use of law as a weapon of war. It is the leveraging of the international, regional and/or domestic legal system as a weapon against the adversary. Lawfare is increasingly becoming the preferred method of waging war in the 21st Century and for obvious reasons. On 28 March 2019, the UNSC Resolution 2462 (2019) reaffirmed the close collaboration between the FATF and the UN in the fight against terrorism. Resolution 2462 (2019) requires, “All States to implement the comprehensive international standards embodied in the revised 40 FATF recommendations on combating money laundering, and the financing of terrorism.” The concluding FATF-session on October 18 held in Paris shares its strategic vision in its appraisal report: ”After strengthening its standards to address the money laundering and terrorist financing risks of virtual assets, the FATF has now agreed on how to assess whether countries have taken the necessary steps to implement the new requirements. Given the global nature of the virtual asset industry, it is essential that countries implement these requirements swiftly, in particular, understanding the risks and ensuring the effective supervision of the sector. From now on, assessments will specifically look at how well countries have implemented these measures. Countries that have already undergone their mutual evaluation must report back during their follow-up process on the actions they have taken in this area. The FATF will closely monitor the developments and will continue to actively engage with the private sector to clarify the FATF’s requirements as they work to comply with them. Emerging assets such as so-called “stablecoins”, and their proposed global networks and platforms, could potentially cause a shift in the virtual asset ecosystem and have implications for money laundering and terrorist financing risks. In general terms, both “stablecoins” and their service providers would be subject to the FATF standards either as virtual assets and virtual asset service providers or as traditional financial assets and their service providers. The FATF is actively monitoring emerging assets including “stablecoins”. It will continue to examine their characteristics and risks, and consider further clarifications on how the FATF standards apply to “stablecoins” and their service providers, as well as whether further updates are necessary. National authorities are responsible for implementing AML/CFT rules in their jurisdiction, through national laws and regulations. The FATF will work to promote the effective global implementation of the FATF standards applicable to virtual assets and other emerging assets”. In this regard, the amendments to foreign exchange regulation laws to restrict the domestic movement of currency beyond a certain limit have already been endorsed by the National Assembly`s standing committee to help relevant agencies curb the practice of Hawala/Hundi and other forms of illegal foreign exchange transactions act. The National Accountability Bureau (NAB) has set up Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Cell at the Bureau’s headquarters. By forming an anti-money laundering cell in the NAB headquarters- Rawalpindi, Islamabad has profoundly bridged the gap existing between FATF’s established international law on Combating the Financing of Terrorism (CFT) and Pakistan’s domestic law on accountability. Pakistan has expressed hope that it has set target till February 2020 to complete all items on its Financial Action Task Force (FATF) action plan. Pakistan’s Economic Affairs Minister Hammed Azhar said that Pakistan will come out of ”grey” to ”white” List by the given deadline. All the while, the US South Asian expert Michael Kugelman said, “For Pakistan, FATF is an issue with too much at stake to warrant the use of external geopolitical issues as leverage”. The writer is an independent ‘IR’ researcher and international law analyst based in Pakistan