ISLAMABAD: Apart from technical compliance, Pakistan needs to launch an aggressive diplomatic effort over the next four weeks to secure enough support and votes to exit the grey list of the Financial Action Task Force (FATF) — the global watchdog on anti-money laundering (AML) and combating financing terror (CFT).
A senior government official told Dawn that the coming FATF Plenary and Working Group meetings in Orlando, Florida, scheduled for June 16-21, would be crucial for Pakistan to get rid of the grey list or fall into the black list having serious economic repercussions. The Orlando plenary will actually set the stage for Pakistan’s future even though a formal announcement would come out at the next FATF plenary due in Paris on October 18-23, he said.
Pakistan was now fully compliant with the related United Nations resolutions, said the official who was part of the Pakistani delegation to ‘Face-to-Face meeting’ of the Asia-Pacific Group, a regional affiliate of the FATF, in Guangzhou, China last week.
Next month’s meetings of global watchdog will be crucial
Pakistan has taken aggressive steps over the last two months in terms of regulatory and monitoring mechanism to meet the FATF requirements and its legal system is generally up to the mark, except some amendments to the Anti-Money Laundering Act (AMLA) 2010 pending before the National Assembly’s standing committee on finance and revenue.
“We believe we have generally delivered on the technical side i.e. legal and administrative action, regulations, monitoring, enforcement and inter-agency and stakeholder coordination and now require more of the diplomatic push to counter the adversaries,” said the official.
He said Prime Minister Imran Khan was expected be given a briefing on the Guangzhou meeting and on the way forward on Monday. He said it was expected Minister for Foreign Affairs Shah Mehmood Qureshi would now coordinate with stakeholders on a strategy to reach out to the world capitals in difficult diplomatic environment where the US-India grouping has greater influence and non-aligned members of the FATF prefer to abstain than siding with Pakistan.
Sources said Pakistan required about 15-16 votes to move out of the grey list and a minimum of three votes to avoid falling into the blacklist. The FATF currently comprises 36 members with voting powers and two regional organisations, representing most of the major financial centres in all parts of the globe.
The FATF plenary had formally placed Pakistan in the grey list in June 2018 due to ‘strategic deficiencies’ in its AML/CFT regime after the country could not secure a minimum of three votes as its friends had their own political targets to secure in the global watchdog.
China is set to secure FATF presidency next year while Saudi Arabia representing the Gulf Cooperation Council is to become a full FATF member. Turkey was the only member that stood by Pakistan despite a strong adverse campaign launched by the US, UK, India and Europe.
The official said the Pakistani delegation led by the finance secretary presented a robust case before the APG panel on the country’s progress on the 10-point action plan committed with the global watchdog despite tough questioning from some participants. The APG appeared generally appreciative of the progress made by Islamabad, he said, adding that it was not the session to draw conclusions or expect judgments from.
The official said Pakistan submitted a progress report at the Guangzhou meeting and had to respond to questions from the APG members to clarify certain things. The APG would now submit its findings, based on Pakistan’s report and question-answer session, to the FATF in its June 16-21 Plenary and Working Group meetings in the United States.
Pakistan briefed the APG in China about its recent actions against currency smuggling and proscribed organisations, tightening of financial and corporate sector systems and operational effectiveness. This included arrests of key operatives of proscribed organisations, treating the outfits as high risk entities, putting more such organisations and their affiliates on the list of banned outfits, blocking their accounts and financial flows and taking control of their assets. The delegation reported that Pakistan had either complied with or was very close to accomplishing the milestones under the FATF action plan.
The government has recently revised its national risk assessment of the corporate sector, strengthened customs procedures on borders and inland movement of funds and assets and put nine more entities on the list of proscribed organisations. Internal control of the banking and non-banking financial institutions, insurance companies and stock exchanges has been strengthened to curb the possibility of money laundering and terror financing. The account opening is now subject to additional checks and scrutiny and existing accounts are being biometrically verified.
Pakistan has recently created a specialised directorate of Cross Border Currency Movement (CBCM) to maintain a database of currency seizures and suspicious transactions. All the model customs formations are required to report each currency seizure on a fortnightly basis. These reports are then shared with the Financial Monitoring Unit (FMU) and the Federal Board of Revenue on a monthly basis or when called for. The CBCM has to maintain and update database of suspicious transaction reports (STRs) and share information with law enforcement agencies, the FMU and FBR on a real time basis.
Also, the Data and Risk Analysis Cell has been created to conduct regular analysis of data pertaining to currency seizures, currency declarations, banking transactions and benami accounts, etc, and continuously update measures to combat money laundering.
Published in Dawn, May 20th, 2019