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FATF begins assessment of anti-money laundering steps

Updated October 09, 2018

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The FATF team is here on a 12-day visit to conduct an 'on-site inspection'. ─ Photo courtesy FATF
The FATF team is here on a 12-day visit to conduct an 'on-site inspection'. ─ Photo courtesy FATF

ISLAMABAD: Pakistan on Monday reported strengthening of its legal and institutional framework to curb terror financing and money laundering when a visiting delegation of global experts began third ‘on-site inspection’ of its commitment with Paris-based Financial Action Task Force (FATF).

The nine-member team of the Asia/Pacific Group (APG) held question-answer sessions with three agencies – Federal Investigation Agency (FIA), Financial Monitoring Unit (FMU) and Anti-Narcotics on five of the 10-point action plan on first day of 12-day deliberations.

It was reported that draft laws have been finalised under which FIA can access to individual accounts after tightening secrecy clauses. Also, punishments on account of illegal financial transactions at home and abroad are planned to be increased to a minimum of three years imprisonment and up to 10 years along with fines going up to Rs50 million each and attachment of properties for up to six months instead of 90 days.

The delegation questioned the officials on how and which terror financing risks had been identified and assessed and supervision was applied to risks and how law enforcement agencies (LEAs) are identifying and investigating terror financing activities and prosecutions target designated persons and entities or those working on their behalf.

Queries also pertained to effectiveness of prosecutions, cooperation of the judiciary and sanctions on capacity and activity of the terror financing individuals and activities. The meeting also probed on effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all 1,267 and 1,373 designated terrorists and their agents.

The purpose of the Mutual Evaluation onsite visit is to assess the effectiveness of Pakistan’s anti-money laundering/counter financing of terrorism (AML/CFT) Regime under FATF’s effectiveness methodology. The visiting team comprised Ian Collins of UK’s New Scotland Yard, James Prussing US Department of the Treasury, Ashraf Abdulla of Financial Intelligence Unit of Maldives, Boby Wahyu Hernawan of Indonesian Ministry of Finance, Gong Jingyan of People’s Bank of China and Mustafa Necmeddin Oztop of Turkish Ministry of Justice.

The ministries of interior, finance, foreign affairs and law besides the State Bank of Pakistan (SBP), Securities and Exchange Commission of Pakistan (SECP), National Counter-Terrorism Authority, FIA, Federal Board of Revenue, National Accountability Bureau, Anti-Narcotics Force, FMU, Central Directorate of National Savings and provincial counter-terrorism departments would remain available for briefings and explanations.

In June 2018, Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies by implementing 10-point action plan to accomplish these objectives.

The successful implementation of 10-point action and its physical verification by APG will lead to FATF de-list Pakistan out of its grey list of countries by September 2019. In August this year, the APG as part of the pre-site mutual evaluation identified a series of deficiencies in Pakistan’s anti-money laundering/counter-terror financing laws and mechanisms.

The authorities are required to upgrade agencies and their human resources to be able to handle foreign requests to block terror financing and freeze illegal and targeted assets. The authorities are working on strengthening of mutual legal assistance laws for extradition of those involved in terror financing and money laundering on requests from FATF-member countries.

By the end of September next year, Pakistan has to comply with the 10-point action plan it committed with the FATF in June to combat terror financing and money laundering to get out of the grey list or else it will be further downgraded into the black list.

By January next year, Pakistan will identify and assess domestic and international terror financing risks to and from its system to strengthen investigations and improve on inter-agency — FIA, SBP, SECP, banks, home and interior departments and associated agencies — coordination as well as federal and provincial coordination to combat these risks.

The government will also complete the profiling (preparing databanks) of terror groups or suspected terrorists, their financial assets and stren­gths, besides their members and their family backgrounds, and make them accessible at the inter-agency level by January. Over the next 12 months, i.e. till September 2019, the government will complete the investigation into a wide range of terror financing activities, including appeals and calls for donations and collection of funds, besides their movements and uses. The outcome will be published at least twice before September next year.

Published in Dawn, October 9th, 2018