The Financial Action Task Force (FATF) has found that Pakistan has successfully complied with 21 out of 27 points of action and decided to keep the country on its 'grey list' until February 2021, the watchdog's president said on Friday.
FATF President Marcus Pleyer announced the decision at a virtual press conference held after the body's three-day plenary session came to an end today.
The global watchdog reviewed Pakistan’s progress on the 27-point action plan for addressing anti-money laundering and terror financing in its plenary session that started on October 21.
In a statement issued after the plenary session concluded, the financial watchdog said: "To date, Pakistan has made progress across all action plan items and has now largely addressed 21 of the 27 action items. As all action plan deadlines have expired, the FATF strongly urges Pakistan to swiftly complete its full action plan by February 2021."
The statement added that Pakistan needed to work on four areas to "address its strategic deficiencies". These include:
demonstrating that law enforcement agencies (LEAs) are identifying and investigating the widest range of terror financing activity, which target designated persons and entities, and those who act on the behalf/direction of the designated persons or entities
demonstrating that terror financing prosecutions result in effective, proportionate and dissuasive sanctions
demonstrating effective implementation of targeted financial sanctions against all 1267 and 1373 designated terrorists and those acting for or on their behalf; preventing the raising and moving of funds including in relation to non-profit organisations; identifying and freezing assets; and prohibiting access to funds and financial services
demonstrating enforcement against violation of terror financing sanctions, including in relation to NPOs, of administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases
In response to a question by a journalist with India Today, Pleyer said that the FATF members had decided "by consensus" that Pakistan needed to work on the six outstanding items before the body would consider paying an "on-site visit" to review Pakistan's progress on the ground.
Answering another question, he said that after the on-site visit by an assessment team, the FATF body would review Pakistan's case in its plenary meeting and decide if the country should be taken off the 'grey list'. He pointed out, however, that there was "another process going on in the Asian Pacific Group" where Pakistan's case is being evaluated.
Meanwhile, an advisory posted on the watchdog's website announced that Iceland and Mongolia were "no longer subject to the FATF’s increased monitoring process".
Shortly after the FATF announced its decision, Minister for Industries Hammad Azhar said that Pakistan had "achieved impressive progress" and congratulated federal and provincial teams "who have worked day and night even during the pandemic to ensure this turn around".
The minister said that due to Pakistan's progress FATF had "acknowledged that any blacklisting is off the table now".
Pakistan has been on the FATF’s grey list since June 2018. The grey list comprises countries being monitored by the watchdog.
The FATF plenary was earlier scheduled in June but Islamabad got an unexpected breather after the global watchdog against financial crimes temporarily postponed all mutual evaluations and follow-up deadlines in the wake of the Covid-19 pandemic.
The Paris-based agency also put a general pause on the review process, thus giving Pakistan an additional four months to meet the requirements.
In February, the FATF had given Islamabad a four-month grace period to complete its 27-point action plan, noting that Pakistan had delivered on 14 points but missed 13 other targets. On July 28, the government reported to parliament compliance with 14 points of the 27-point action plan and with 10 of the 40 recommendations.
By September 16, however, the joint session of the parliament amended about 15 laws to upgrade its legal system matching international standards as required by the FATF. Pakistani officials were hopeful of a positive outcome, especially after the recent legislation by parliament on counter-terror financing and money laundering.
The FATF places those countries on its grey list which are not taking measures to combat terror funding and money laundering. Placement on the grey list is a warning for a country that it may be put on the blacklist in case of its failure to take effective measures against money laundering and terror financing.
After being placed on the grey list, a country is directly scrutinised by the financial watchdog until it is satisfied by the measures taken to curb terror financing and money laundering. If the watchdog does not deem progress by countries on the list as satisfactory, they may be relegated to the blacklist — a list of the countries branded as uncooperative and tax havens for terror funding. These countries may face global sanctions as well.
Countries on the blacklist — or 'high-risk jurisdictions' — have significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation, according to the watchdog.
India's plans will fail
Foreign Minister Shah Mehmood Qureshi on Friday said India's plans to "push Pakistan into the blacklist" of the FATF will fail because of the steps the country has taken to meet the requirements of the global money laundering and terrorist financing watchdog.
He was speaking to reporters in Islamabad, hours before the FATF announced its decision.
"I can say this with confidence, India will fail in its designs to push Pakistan into the blacklist," Qureshi said, adding that the world had "acknowledged" today that the incumbent government and parliament had taken "concrete steps" regarding the FATF action plan.
He said Pakistan had conducted legislation and taken administrative measures to check money laundering and terror financing which were not seen in the recent past.
Of the 27 points on which the FATF had asked Pakistan to take action, "I can say with conviction we have implemented 21," the minister said. He added that progress had also been made on the remaining six points.
"Considering all this progress, the FATF forum should view Pakistan's measures positively and create room for Pakistan," he emphasised, saying he hoped the world will "acknowledge" the steps taken by the country.
A day earlier, the Foreign Office (FO) rejected baseless reports circulating in the media claiming Saudi Arabia had voted against Pakistan at the FATF session.
“Pakistan and Saudi Arabia enjoy strong fraternal ties and the two countries have always cooperated with each other on all matters of bilateral, regional and international importance,” FO spokesman Zahid Hafeez Chaudhri had said.