Pakistan gets FATF reprieve, but only till October

Updated 21 Feb 2020


Global watchdog acknowledges Islamabad has taken action to curb terror financing. — AFP/File
Global watchdog acknowledges Islamabad has taken action to curb terror financing. — AFP/File

WASHINGTON: Pakistan has avoided the Financial Action Task Force’s (FATF) blacklist, but only until October, when it will have to report back to the world financial watchdog that it has successfully implemented its own action plan to counter terror financing, FATF and Pakistani officials said on Friday.

“The FATF strongly urges Pakistan to swiftly complete its action plan by Oct 2019 when the last set of action plan items are set to expire,” the FATF said in a statement. “Otherwise, the FATF will decide the next step at that time for insufficient progress.”

At the end of its plenary meeting in Orlando, Florida, on Friday, the FATF pointed out that Pakistan had already missed two deadlines for implementing the action plan. The first expired in January and the second last month.

In Islamabad, the ministry of finance said the FATF plenary meeting reviewed the compliance of a number of countries, including Pakistan, with the international standards on Anti-Money Laundering and Counter Financing of Terrorism (AML-CFT).

Global watchdog acknowledges Islamabad has taken action to curb terror financing

The ministry noted that Pakistan was placed on an FATF compliance document in view of an action plan agreed in June last year to strengthen its AML/CFT regime.

“The FATF reviewed progress made by Pakistan towards the implementation of the action plan. It acknowledged the steps taken by Pakistan to improve its AML/CFT regime and highlighted the need for further actions for implementing the action plan,” the ministry said.

“FATF will undertake the next review of Pakistan’s progress in October 2019,” the statement added.

The ministry assured the FATF of Pakistan’s “commitment to take all necessary measures to ensure completion of the Action Plan in a timely manner”.

The international media, while reporting the FATF decision, also noted that “India wants Pakistan blacklisted, which would likely result in sanctions.”

India is currently a co-chair of the joint group of FATF and the Asia Pacific Group (APG), which deals with Pakistan.

Pakistan, which ran an extensive diplomatic campaign to avoid blacklisting in Orlando, now has two major tasks before it.

The first is to convince the FATF by October that it has implemented its action plan. And the second is to win over 15 out of 36 FATF members to come off a grey list of countries which are monitored to ensure compliance.

According to some estimates, Pakistan suffers an annual loss of up to $10 billion because of the grey list.

Foreign Minister Shah Mehmood Qureshi, who was recently in Britain, said the British government had agreed to support Pakistan’s effort to move out of the list.

China, Malaysia and Turkey are the three friendly states that played a key role in enabling Pakistan avoid the classification in Orlando, which would have been detrimental to an already weak national economy.

Pakistan took a number of key measures recently to combat terror financing and money laundering, which also helped convince FATF member states not to put Islamabad on the blacklist.

The measures include banning currency transactions without a national tax number, disallowing open market conversion of more than $500 without submitting a copy of the national identity card, proscribing militant groups like Jamaat-ud-Dawa (JUD) and Jaish-e-Mohammad (JeM) and seizing their assets.

But the measures only earned a temporary breather for Pakistan. The FATF-affiliated Asia Pacific Group (APG) reviewed the country’s security mechanism and financial systems last year and placed Pakistan on its grey list in June.

While FATF acknowledged that Pakistan has made progress, it urged Islamabad to do more through “dissuasive sanctions” and “effective prosecution” to ensure there is no room for money laundering and terror financing.

Published in Dawn, June 22nd, 2019