ISLAMABAD: Pakistan’s performance to meet international commitments and standards in the fight against money laundering and terror financing will be reviewed by the Financial Action Task Force (FATF) at its meeting slated to be held in Beijing on June 21-26.
In February, the Paris-based global watchdog against financial crimes gave Pakistan a four-month grace period to complete its 27-point action plan against money laundering and terror financing committed with the international community when it noted that Pakistan had delivered on 14 points and missed 13 other targets.
A senior government official told Dawn that Pakistan’s performance would be reviewed at the joint working group meetings of the FATF and Eurasian Group (EAG) scheduled for June 21-26 in Beijing and the assessment would lead to final announcement in October this year if Pakistan should move out of the grey list. He said certain action points were yet to be complied with the commitments mainly because of ongoing coronavirus lockdowns.
Officials said that Pakistan had put in place a broad-based strategy for taking necessary actions to complete outstanding commitments with the FATF in February and was actively making progress. The FATF announced on February 21 that all deadlines given to Pakistan to complete 27-point action plan had expired and yet only 14 items had largely been completed, leaving 13 unaccomplished targets. It strongly urged Pakistan to swiftly complete its full action plan by June 2020 or else it would be moved to the list of monitored jurisdiction, commonly known as blacklist.
Islamabad given four months in February to complete its 27-point action plan
“Otherwise, should significant and sustainable progress especially in prosecuting and penalising TF (terrorist financing) not be made by the next Plenary, the FATF will take action, which could include the FATF calling on its members and urging all jurisdiction to advise their Financial Institutions (FIs) to give special attention to business relations and transactions with Pakistan”, the FATF said in a formal announcement in February.
The FATF had noted “recent and notable improvements” but “again expresses concerns given Pakistan’s failure to complete its action plan in line with the agreed timelines and in light of the TF risks emanating from the jurisdiction”.
Pakistan has to show compliance with 13 remaining action points in eight key categories. The country has to demonstrate that remedial actions and sanctions are applied in cases of AML/CFT violations, relating to terrorist financing (TF) risk management and TFS (terror financing sanctions) obligations.
Pakistan has also to demonstrate that competent authorities were cooperating and taking action to identify and take enforcement action against illegal money or value transfer services and prove the implementation of cross-border currency and ‘bearer negotiable instruments’ controls at all ports of entry, including applying effective, proportionate and dissuasive sanctions.
Pakistan also has demonstrate that law enforcement agencies are identifying and investigating the widest range of TF activity and that TF investigations and prosecutions target designated persons and entities, and those acting on behalf or at the direction of the designated persons or entities besides showing TF prosecutions result in effective, proportionate and dissuasive sanctions.
Pakistan’s outstanding action areas also include effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all 1,267 and 1,373 designated terrorists and those acting for or on their behalf, including preventing the raising and moving of funds, identifying and freezing assets (movable and immovable), and prohibiting access to funds and financial services.
Pakistan will also have to demonstrate enforcement against TFS violations, including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases and prove that facilities and services owned or controlled by designated person are deprived of their resources and the usage of the resources.
The FATF plenary had formally placed Pakistan in the grey list in June 2018 due to ‘strategic deficiencies’ in its AML/CFT regime after a push from India supported by the US, UK and some European countries. Pakistan then committed at the highest level to a 27-point action plan but failed to meet deadlines.
Pakistan has already finalised major amendments to at least a dozen of its laws to meet FATF requirements by June this year.
Published in Dawn, April 7th, 2020