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ISLAMABAD: Noting ‘limited progress’ on January 2019 milestones, the Financial Action Task Force (FATF) has expressed concern over Pakistan’s inability to demonstrate understanding of terror financing risks posed by seven proscribed organisations and elements linked to Taliban.

The Paris-based global watchdog against international financial crimes also urged “Pakistan to swiftly complete its action plan, particularly those with timelines of May 2019”.

The FATF plenary session and meetings of its various groups were held from Feb 18 to 22 to review performance of 14 countries having strategic deficiencies in their systems to counter money laundering and terror financing.

The FATF expressed grave concern and condemned the violent terrorist attack last week that killed at least 40 Indian security personnel in Pulwama in India-held Jammu and Kashmir and noted that similar actions in many other countries proved that terrorism continued to threaten societies and citizens around the world.

Islamabad asked to swiftly complete its action plan, particularly targets set for May when progress will be reviewed

This appeared to be a success of India’s lobbying to put pressure on Pakistan. Finance Minister Asad Umar, in a tweet, said the FATF maintained Pakistan’s current status (grey list) despite hectic efforts and lobbying to get the country black-listed.

An FATF statement issued on the conclusion of the weeklong engagements noted that Pakistan had “taken steps towards improving its AML/CFT [anti-money laundering / combating financing of terrorism) regime, including by operationalising the integrated database for its currency declaration regime’ after its June 2018 high-level political commitment to work with the FATF and the APG to strengthen its AML/CFT regime and address its strategic counterterrorist financing-related deficiencies.

It said Pakistan had revised its terror financing risk assessment but did “not demonstrate a proper understanding of the terror financing risks posed by Daesh, AQ (Al-Qaeda), JuD (Jamaat-ud-Dawa), FIF (Falah-i-Insanyat-Foundation), LeT (Lashkar-i-Taiba), JeM (Jaish-i-Mohammad), HQN (Haqqani Network), and persons affiliated with the Taliban”.

Pakistan’s performance report was reviewed by the International Country Risk Guide — Political Risk Services Group and presented by the Asia-Pacific Group (APG) — an associate firm of the FATF. The Pakistani delegation led by Finance Secretary Arif Ahmed Khan and comprising the director general of Financial Monitoring Unit, a director of the foreign affairs ministry and a legal expert participated.

The FATF also called on Pakistan to continue to work on implementing its action plan to address its strategic deficiencies, particularly swiftly on targets set for compliance by May when its progress would be reviewed again, leading to its removal from the grey list or downgrade to black list having serious financial implications.

Pakistan will have to comply with a 10-point action plan. For this, it will be required to adequately demonstrate its proper understanding of the terror financing risks posed by the terrorist groups listed above, and conduct supervision on a risk-sensitive basis and prove 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.

The country will also have to demonstrate that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services and demonstrate that authorities are identifying cash couriers and enforcing controls on illicit movement of currency and understanding the risk of cash couriers being used for terror financing.

Pakistan will also have to improve inter-agency coordination, including between the provincial and federal authorities, on combating terrorism financing risks and demonstrate that law enforcement agencies are identifying and investigating the widest range of terror financing activity and that such investigations and prosecutions target designated persons and entities and persons and entities acting on behalf or at the directives of the designated persons or entities.

Moreover, the country has to demonstrate that terror financing prosecutions result in effective, proportionate and dissuasive sanctions and enhancing the capacity and support for prosecutors and the judiciary and to show effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all United Nations resolutions-designated terrorists and those acting for or on their behalf, including preventing the raising and moving of funds, identifying and freezing movable and immovable assets and prohibiting access to funds and financial services.

On top of that, Pakistan will also have to demonstrate enforcement against terror financing sanction violations, including administrative and criminal penalties, and the provincial and federal authorities cooperating on enforcement cases and prove beyond doubt that facilities and services owned or controlled by designated person are deprived of their resources and the usage of the resources.

A finance ministry statement said the FATF would undertake the next review of Pakistan’s progress in June which would be preceded by a face-to-face meeting with the Joint Group in May. It said the FATF advised Pakistan to take further actions, including detailed assessment of terrorism financing risk, strengthening of AML/CFT supervisory measures by the regulatory authorities, financial inquiries and investigations into terrorist funding activities and promotion of awareness among the citizens on CFT measures and controls.

Published in Dawn, February 23rd, 2019