ISLAMABAD: As the Canberra round of talks of the Asia-Pacific Group (APG) on Money Laundering — regional affiliate of the Financial Action Task Force (FATF) — concluded on Friday, further details emerged about how Pakistan has fared through the process. The meetings are part of the larger process through which Pakistan has to go to exit the FATF grey list.
Though the APG admitted Pakistan’s Mutual Evaluation Report, it also downgraded the country to its “Enhanced Follow-up” category over technical deficiencies to meet normal international financial standards in force by October 2018.
This means the country will now be required to submit quarterly progress reports, instead of biannual ones, to the APG. The next quarterly report will be due February 1, 2020 to show improvements in its technical standards against money laundering and terror financing. The APG has 40 recommendations for anti-money laundering (AML) standards and another eight for combating financing terror (CFT).
The decision which was not announced by the APG in its official press release at the end of the meetings that ran from August 18-23 in Canberra, Australia was misinterpreted by Indian media as Pakistan’s ‘enhanced blacklisting by APG’. Pakistan’s ministry of finance dismissed these reports as “incorrect and baseless”.
In statement, the ministry said the APG’s 22nd annual meeting in Canberra “has adopted Pakistan’s 3rd Mutual Evaluation Report and has put Pakistan in its enhanced follow-up as per APG’s Third Round Mutual Evaluation Procedures”. In line with APG’s Third Round Mutual Evaluation Procedures, Pakistan will be required to submit follow-up progress reports to APG on quarterly basis, it added.
Under the APG’s mutual evaluation follow-up procedures, all members are required to report on progress following the adoption of their mutual evaluation report. In line with the APG’s mutual evaluation follow-up publication policy, follow-up reports are only published (i.e. made available to the public on the APG website) upon a member’s removal from the regular follow-up process, or upon request from the member.
Members may, at any stage including following the discussion and adoption of a MER, decide to place a member under either regular or enhanced follow up. Regular follow-up is the default monitoring mechanism, and is based on a system of biannual reporting.
On the other hand, Enhanced follow-up is based on the APG’s membership policy and deals with members with significant deficiencies (for technical compliance or effectiveness) in their AML/CFT systems through a more intensive process of monitoring.
An official who has been part of the Canberra meetings told Dawn that there was no concept of blacklisting in APG and Indians may be advancing their political agenda through misinterpretation or misrepresentations. However, he agreed that based on APG criteria, Islamabad had been put on its ‘enhanced monitoring category, under which Pakistan “would be required to submit first report to APG on February 1, 2020 to update on improvements in our technical compliance”.
He conceded that Pakistan’s mutual evaluation report (MER) adopted by the APG was weak as it was based on ground situation in October 2018 when Pakistan was in the early stages of efforts to meet international standards and risk assessments against money laundering and terror financing. “A lot of positive developments have taken place since October last year which have not been made part of this report due to time based criteria of APG” he said, adding that “the efforts made by India to further downgrade Pakistan were stopped successfully”.
The official explained that Pakistan has to now submit first Progress Report on 40 Technical Recommendations of FATF by February 1, 2020. Thereafter, the APG Mutual Evaluation Committee will review this progress report and approve it if there are any upgrades done. He said that factually Pakistan was genuinely expecting a few upgrades as a number of deficiencies reported as of October 2018 had already been addressed.
The APG in its press release at the conclusion of its annual meeting said the APG members adopted six significant mutual evaluation reports. “The reports - for China, Chinese Taipei, Hong Kong, China, Pakistan, the Philippines and Solomon Islands - were analysed and discussed in detail over two full days and will now be subject to post-plenary quality and consistency review prior to publication”, it said adding the “Final publication on the APG website is expected in early October 2019”.
Published in Dawn, August 24th, 2019