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Pakistan's progress on FATF requirement termed unsatisfactory

Updated October 20, 2018

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Asia-Pacific Group’s team will visit Pakistan again in March-April for another ‘on-site mutual evaluation’. — Photo/File
Asia-Pacific Group’s team will visit Pakistan again in March-April for another ‘on-site mutual evaluation’. — Photo/File

ISLAMABAD: A delegation of the Asia-Pacific Group (APG) has expre­ss­ed dissatisfaction over Pakistan’s progress to comply with international best practices against money laundering and counter-terror financing.

Informed sources told Dawn that the APG delegation shared its final findings with the authorities of all relevant agencies, highlighting deficiencies in law, regulations and mechanisms and weaknesses of various institutions, and with this pace Pakistan was unlikely to get out of the grey list of the Paris-based Financial Action Task Force (FATF).

The visiting delegation’s Friday meeting was the culmination of its long consultations with the ministries of interior, finance, foreign affairs and law, the Securities and Exchange Commission of Pakistan (SECP), State Bank of Pakistan (SBP), National Counter-Terrorism Authority, Federal Investigation Agency (FIA), Federal Board of Revenue, National Accoun­tability Bureau, Anti-Narcotics Force, Financial Monitoring Unit, Central Directorate of National Savings and provincial counter-terrorism departments.

Asia-Pacific Group’s team will visit Pakistan again in March-April for another ‘on-site mutual evaluation’

The APG delegation told these authorities that it would submit its draft report on its findings to Pakistan by Nov 19. The country was asked to submit its response to the findings within 15 days after the receipt of the report on the basis of which the APG would submit its interim report to the FATF in Paris.

The APG delegation will visit Pakistan again in March-April next year for another ‘on-site mutual evaluation’ whose report will be made public in July 2019. The authorities were told in clear terms that Pakistan would have to make robust and significant progress from now onwards and before the next on-site review in March-April if it wanted to move out of the grey list or else would fall into the blacklist having serious consequences.

The APG delegation, the sources said, highlighted shortcomings on anti-money laundering front, control and monitoring of nonprofit organisations and counter-terror financing mechanism as various institutions suffered poor interface of information sharing and action to combat these deficiencies. Even in areas where legal framework was robust, the APG found the implementation as too weak, the sources said.

The delegation is also reported to have informed the finance minister that the relevant agencies during interactions with the APG were either ill-prepared and ill-informed or unwilling to share information.

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

In June, Pakistan made a high-level political commitment to working with the FATF and APG to strengthen its AML/CFT regime and address its strategic counter-terrorist financing-related deficiencies by implementing a 10-point action plan to accomplish these objectives. The successful implementation of the action plan and its physical verification by the APG will get Pakistan out of the FATF grey list by September next year.

In August this year, the APG as part of the pre-site mutual evaluation had identified a series of deficiencies in Pakistan’s AML/CFT laws and mechanisms. The Pakistani 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 mutual legal assistance laws for extradition of those involved in terror financing and money laundering on the requests from FATF-member countries.

By the end of September next year, Pakistan will have to comply with the 10-point action plan it had committed with the FATF in June to combat terror financing and money laundering to get out of the grey list or else fall into the blacklist. By January next year, Pakistan will have to identify and assess domestic and international terror financing risks to and from its system to strengthen investigations and improve 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 have to complete the profiling (preparing databanks) of terror groups or suspected terrorists and 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 have to complete investigation into the widest range of terror financing activities, including appeals and calls for donations and collection of funds, besides their movements and uses. The outcome will have to be published at least twice before September next year.

Published in Dawn, October 20th, 2018