The Financial Action Task Force (FATF) on Friday formally identified Pakistan as a country with "strategic deficiencies" in its anti-money laundering and counter-terrorism financing regime, notifying the steps the country must take to address the shortcomings.
Pakistan's placement on FATF's 'grey list', which had been decided in February, had taken effect on Thursday after the country negotiated an action plan with the global illicit financing watchdog to address the deficiencies in its regime.
According to a Dawn report, Pakistan reportedly committed to a 26-point action plan, which would be implemented over the next 15 months. Besides other actions, the plan includes squelching of finances of Jamaatud Dawa, Falah-i-Insaniat, Lashkar-e-Taiba, Jaish-e-Muhammad, Haqqani network and Afghan Taliban. Failure to negotiate the action plan could have led Pakistan to the blacklist.
The deficiencies identified in Pakistani anti-money laundering and counterterrorism financing regime included inadequate monitoring and regulatory mechanisms, low conviction rate on unlawful transactions, poor implementation of United Nations Security Council resolutions 1267 and 1373 and cross-border illicit movement of currency by terrorist groups.
On Friday, an FATF statement said Pakistan had made "a high-level political commitment to work with the FATF and APG [Asia/Pacific Group on Money Laundering] to strengthen its AML/CFT [Anti-Money Laundering and Combating the Financing of Terrorism] regime and to address its strategic counter-terrorist financing-related deficiencies".
It said FATF will "closely monitor" Pakistan's efforts to implement its action plan to accomplish the above objectives, including by:
- Demonstrating that terrorist financing risks are properly identified, assessed, and that supervision is applied on a risk-sensitive basis
- Demonstrating that remedial actions and sanctions are applied in cases of AML/CFT violations, and that these actions have an effect on AML/CFT compliance by financial institutions
- Demonstrating that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS)
- Demonstrating that authorities are identifying cash couriers and enforcing controls on illicit movement of currency and understanding the risk of cash couriers being used for terrorist financing
- Improving inter-agency coordination including between provincial and federal authorities on combating terrorist financing risks
- Demonstrating that law enforcement agencies (LEAs) are identifying and investigating the widest range of terrorist financing activity and that terrorist financing investigations and prosecutions target designated persons and entities, and persons and entities acting on behalf or at the direction of the designated persons or entities
- Demonstrating that terrorist financing prosecutions result in effective, proportionate and dissuasive sanctions and enhancing the capacity and support for prosecutors and the judiciary
- Demonstrating effective implementation of targeted financial sanctions against all 1267 and 1373 designated terrorists and those acting for or on their behalf, including preventing the raising and moving of funds, identifying and freezing assets (movable and immovable), and prohibiting access to funds and financial services
- Demonstrating enforcement against targeted financial sanctions violations including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases
- Demonstrating that facilities and services owned or controlled by designated persons are deprived of their resources and the usage of the resources.
The Foreign Office had on Thursday reaffirmed Pakistan’s commitment to executing the action plan which once implemented would get it out of the grey list.
In its June 9 meeting the National Security Committee had extended the commitment to implement the action plan. The FATF requires high-level political commitment from the country concerned to implement the needed legal, regulatory and operational reforms.
The move to get Pakistan listed was sponsored by the United States and its allies Britain, France, and Germany.