WASHINGTON: As the new government in Islamabad starts work on addressing the concerns related to money laundering and terror financing, a US State Department report released on Thursday said that Pakistan criminalised terrorist financing through the Anti-Terrorism Act (ATA), but its implementation remained uneven.
Pakistan is a member of the Asia Pacific Group on Money Laundering — a Financial Action Task Force (FATF)-style regional body. In June, the Paris-based FATF placed Pakistan on its grey list of countries that could be marked out for economic sanctions if they failed to prevent terrorists from collecting funds within their domain.
The official US report — released with the State Department’s country reports on terrorism — also highlights FATF’s concerns about Pakistan.
“The FATF continued to note concern that Pakistan’s outstanding gaps in the implementation of the UN Security Council ISIL (Daesh) and Al Qaida sanctions regime have not been resolved, and that UN-listed entities — including Lashkar-e-Taiba (LeT) and its affiliates — were not effectively prohibited from raising funds in Pakistan, nor being denied financial services,” the report points out.
Washington claims progress on efforts to implement UN sanctions related to designated entities is slow
Last month, Finance Minister Asad Umar told the Senate that FATF had given Pakistan 15 months to comply with these requirements. The minister said FATF had identified 27 deficiencies in the Pakistani financial system, including “currency smuggling, hawala and terror financing of proscribed organisations”.
The minister had told the house that the government would be addressing all the objections raised not only to satisfy the international community but also because it was in Pakistan’s own interest to get rid of terror financing and terrorism.
The US State Department in its report acknowledged that Pakistan’s laws technically comply with international anti-money laundering/countering the financing of terrorism standards, but added that Pakistani authorities “failed to uniformly implement UN sanctions related to designated entities and individuals such as LeT and its affiliates, which continued to make use of economic resources and raise funds”.
The report also refers to a Nov 2017 decision of the Lahore High Court which refused to extend the detention of LeT founder Hafiz Saeed as it judged the government had not provided sufficient evidence against him nor had it charged Hafiz Saeed with a crime.
The US report also examines the National Action Plan that the PML-N government gave to FATF in June this year, noting that the plan contains efforts to prevent and counter terrorist financing, including by enhancing interagency coordination.
The law designates the use of unlicensed hundi and hawala systems as predicate offences to terrorism and also requires banks to report suspicious transactions to Pakistan’s financial intelligence unit, the State Bank’s Financial Monitoring Unit.
The US State Department, however, notes that throughout 2017 “these unlicensed money transfer systems persisted throughout the country and were open to abuse by terrorist financiers operating in the cross-border area”.
Reviewing Pakistan’s efforts to fight terrorism, the report notes that Pakistan continued to experience significant terrorist threats in 2017, although the number of attacks and casualties decreased from previous years.
The report also identifies several major terrorist groups focused on conducting attacks in Pakistan, including the Tehreek-i-Taliban Pakistan, Jamaatul Ahrar, and the sectarian group Lashkar-i-Jhangvi al-Alami.
The report also mentions groups located in Pakistan, but focused on conducting attacks outside the country, included the Afghan Taliban, Haqqani network, Lashkar-e-Taiba and Jaish-e-Mohammad (JeM).
The reports notes that in 2017, the terrorists used a range of tactics — stationary and vehicle-borne improvised explosive devices, suicide bombings, targeted assassinations, and rocket-propelled grenades — to attack individuals, schools, markets, government institutions and places of worship.
The report also notes that the Pakistani government and military continued high-profile efforts to disrupt terrorist attacks and eliminate anti-state militants. “Progress, however, remained slow on the government’s efforts to implement UN sanctions related to designated entities and enforce anti-money laundering/countering the financing of terrorism (AML/CFT) controls.”
The State Department also said that the Pakistani government pledged support to political reconciliation between the Afghan government and the Afghan Taliban but “did not restrict the Afghan Taliban and Haqqani network from operating in Pakistan-based safe havens and threatening US and Afghan forces in Afghanistan”.
The government, the report added, also failed to “significantly limit” LeT and JeM from openly raising money, recruiting and training in Pakistan — although the Elections Commission of Pakistan refused to allow a LeT-affiliated group to register as a political party.
Published in Dawn, September 21st, 2018