Pakistan moves closer to removal from 'grey list' after FATF says all items on action plan met

Published June 17, 2022
Financial Action Task Force (FATF) officials are seen on the second day of the latest plenary session in Berlin, Germany. — Photo via FATF Twitter
Financial Action Task Force (FATF) officials are seen on the second day of the latest plenary session in Berlin, Germany. — Photo via FATF Twitter

The Financial Action Task Force (FATF) said on Friday that Pakistan had met all 34 items on two separate action plans, adding that the watchdog will now schedule an on-site visit to verify the implementation and sustainability of the country's money laundering and counter-terrorism financing measures before removing it from its increased monitoring list, also known as the grey list.

According to a statement by the global money laundering and terrorist financing watchdog, Pakistan has substantially completed all items on both its action plans, which showed that necessary political commitment was in place to sustain implementation and improvement in the future.

While announcing the watchdog's decision, FATF President Dr Marcus Pleyer acknowledged the reforms implemented by the country, saying "they are good for the stability and security of the country".

He, however, added that "Pakistan is not being removed from the grey list today. The country will be removed from the list if it successfully passes the on-site visit". Pleyer said Pakistan will have to ensure [during the visit] that it effectively tackled money laundering and funding of terrorist groups.

"Pakistan demonstrated that terror financing investigations and prosecutions target senior leaders and commanders of UN-designated terrorist groups and that there is a positive upwards trend in the number of money laundering investigations and prosecutions being pursued in Pakistan, in line with Pakistan's risk profile," the watchdog's written statement said.

Pakistan also largely addressed its 2021 action plan ahead of the set times, it added.

Soon after the development, Minister of State for Foreign Affairs Hina Rabbani Khar congratulated the country, saying the international community had "unanimously" acknowledged the country's efforts.

"Our success is the result of four years of a challenging journey. Pakistan reaffirms resolve to continue the momentum and give our economy a boost," she said.

In a video message, Khar said "now our process of exiting the grey list as per the FATF procedure starts, according to which a technical evaluation team will be sent to Pakistan.

"It is our full effort that this team completes its work before October's plenary cycle and we have told them that we will ensure their comfort and ease," she said, adding that the process would come to an end in October.

Meanwhile, Chief of Army Staff General Qamar Javed Bajwa said the completion of the FATF's action plans by Pakistan was a "great achievement".

In a statement tweeted by the ISPR, the army chief said it was a monumental effort paving way for the country's "whitelisting".

"A core cell at the General Headquarters, which steered the national effort and civil-military team which synergised the implementation of the action plan made it possible, hence making Pakistan proud," the COAS said.

"Absolutely brilliant," said Defence Minister Khawaja Asif.

Minister for Poverty Alleviation and Social Safety Shazia Marri also praised the development as "good news".

She said Pakistan had covered a lot of ground in confronting money laundering and countering terror financing through implementing the action plans.

"The engagement with FATF has led to the development of a strong AML/CFT framework in Pakistan and resulted in improving of our systems to cope with future challenges," she said.

The FATF decision came during a press conference after the conclusion of a four-day plenary session that began in Berlin, Germany, on Tuesday.

Delegates representing 206 FATF members and observers — including the International Monetary Fund (IMF), the United Nations, the World Bank, and the Egmont Group of Financial Intelligence Units — attended the plenary session.

Read: There and back again — A timeline of Pakistan's unfortunate 'grey listing' by FATF

Diplomatic sources earlier told Dawn that China and some other allies were quietly working to get Pakistan off the grey list latest during the latest plenary session.

Recent reports in the international media also mentioned this "quiet lobbying", led by China, and one Indian media outlet reported that the plenary session "is likely to decide to move Pakistan out from the list of countries under increased monitoring, commonly known as its grey list".

Several politicians, mostly from the PTI, and journalists posted on social media today that the FATF had removed Pakistan from the grey list. However, at the time, Khar, who was leading Pakistan's delegation in Berlin, cautioned that prejudging the outcome and speculative reporting should be avoided.

She pointed out that the plenary meetings were still ongoing and the FATF would issue a statement tonight after their conclusion.

She added that a press conference would be held at the foreign ministry on Saturday (tomorrow) in this regard.

Information Minister Marriyum Aurangzeb also called for an end to speculations about the plenary session's outcomes, terming them inappropriate.

Four years on the 'grey list'

Pakistan has been on the grey list since June 2018.

Sources told Dawn that an April 9 judgement by an anti-terrorism court in Lahore could also help Pakistan in removing this stigma. The court sent Lashkar-e-Tayyaba chief Hafiz Saeed to prison for 33 years on terrorism charges.

Those who support the move to remove Pakistan from the list point out that the two cases that led to his imprisonment were filed by Pakistan's Counter-Terrorism Department.

In its last plenary, held in Paris in March this year, the FATF noted that "Pakistan has completed 26 of the 27 action items in its 2018 action plan". The FATF encouraged Pakistan "to address, as soon as possible, the one remaining item — investigating terrorism financing and targeting" senior leaders and commanders of UN-designated terrorist groups.

FATF acknowledged at the time that Pakistan had also met six of the seven action plan items — part of a separate list — it was asked to comply with in June 2021 to counter money laundering. In June 2021, when most observers had expected Pakistan would be removed from the monitoring list after having completed 26 out of the 27 items on the original action plan, the watchdog, in a surprise move, had announced Pakistan would have to show compliance with a parallel seven-point plan in order to reach safe shores.

For the latest plenary session, the Ministry of Foreign Affairs had prepared a presentation for the FATF plenary, showing how Pakistan has completed all the 27 tasks that it was given.

How is a country removed from the list?

According to the FATF website, a country needs to complete all or nearly all of the components of its action plan in order to be removed from the monitoring list. Once the global watchdog has determined that a country has completed the components, it will schedule an on-site visit to "confirm that the implementation of the necessary legal, regulatory, and/or operational reforms is under way and there is the necessary political commitment and institutional capacity to sustain implementation".

If there is a positive outcome of the visit, the FATF would decide on removing the country from public identification at the next plenary.

The country would continue to work on improving its anti-money laundering and counter-terror financing regimes through the FATF's normal follow-up process.

PTI's 'success'

As speculation mounted on Pakistan's possible exit from the list, members of the former PTI government cabinet, claimed credit for the purported development.

Former finance minister Shaukat Tarin said the "removal" was another feather in the cap of Hammad Azhar, who was the former energy minister and also the government's top coordinator for efforts on anti-money laundering and counter-terror financing.

"Another success of PTI govt. #FATF #ThankYouImranKhan," tweeted former human rights minister Shireen Mazari.

Senator Ejaz Chaudhry said he hoped Pakistan would exit the grey list today, terming it the result of the Imran Khan-led government's work.

Chaudhry feared that the incumbent government would take credit for it.

The party's official Twitter account also said, "If we get on #FATF whitelist today, imported govt will probably try to take credit. But everyone must know that since regime change, there have been no laws related to FATF that they have passed, hence if this success on FATF comes, it will be another #ThankYouImranKhan event!"

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