FATF compliance will require all-out effort

Updated June 23, 2019

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More than half a dozen departments need to work together to ensure compliance before the next review. — File photo courtesy of Fsc.go.kr
More than half a dozen departments need to work together to ensure compliance before the next review. — File photo courtesy of Fsc.go.kr

KARACHI: As the Pakistani delegation returns from Orlando after the Financial Action Task Force (FATF) meetings, they will bring with them a heavy agenda of tasks for the government to execute. The country has been granted two more months to complete compliance with its own action plan submitted to FATF last year and the next review is scheduled for September.

According to government officials who spoke only on the condition that their names not be used, a multiagency effort will have to be launched to complete compliance with the action. Key areas of focus will be the Terror Financing Risk Assessment by National Counter Terrorism Authority (Nacta), Sectoral Risk Assessment of Cash Smuggling by the Federal Board of Revenue with interagency coordination to be provided by Nacta.

“Investigations, prosecution and convictions by our law enforcement agencies will be required” says one official with deep familiarity of the action plan and where compliance is being sought. “The Federal Investigation Agency and Counter Terrorism Departments (CTD) of the police forces will have to take ownership here.” Action is also being sought against illegal Money and Value Transfer Services, such as Hawala and Hundi, by FIA in coordination with State Bank of Pakistan (SBP), along with a set of supervisory actions by regulators, freezing of assets of individuals and entities designated by the United Nations as terrorists. On top of this, a strategy to manage these assets by authorities will need to be demonstrated.

More than half a dozen departments need to work together to ensure compliance before next review

Almost half a dozen government departments will need to move in a coordinated manner to plug the compliance deficiencies identified by FATF in Pakistan’s own action plan. “Key institutions that will need to focus include Nacta, FIA, CTDs, Home Departments, Interior, Ministry of Foreign Affairs and both regulators,” said one source familiar with Pakistan’s engagements with FATF. Both regulators refer to the SBP and the Securities and Exchange Commission. “If they deliver, we all deliver. They are all linked and must pull up together.”

Past governments have struggled to get this level of coordination, which is essential in producing results on the ground. One of the items mentioned in the list of actions required by FATF is “improving inter-agency coordination including between provincial and federal authorities,” in combating terror financing risks.

Of particular interest is the action required against “designated persons and entities”, including demonstrating that “law enforcement agencies are identifying and investigating the widest range” of terror-financing activity. After this, FATF has also asked for prosecution targeting designated persons and entities and those acting on their behalf. After that, FATF also wants to see that these “prosecutions result in effective, proportionate and dissuasive sanctions.” The focus is now on far-reaching actions.

The Pakistani delegation to FATF meetings consisted of the DG Financial Monitoring Unit and the DG Ministry of Foreign Affairs.

Published in Dawn, June 23rd, 2019