ISLAMABAD: Pakistan is expected to finally exit the ‘increased monitoring list’ — commonly known as grey list — of the Financial Action Task Force (FATF) on Oct 21, after languishing in the infamous category for almost 52 months.

“The first FATF Plenary under the two-year Singapore Presidency of T. Raja Kumar will take place on October 20-21, 2022,” said the Paris-based global watchdog on dirty money. Delegates representing 206 members of the Global Network and observer organisations, including the International Monetary Fund, the United Nations, the World Bank, Interpol and the Egmont Group of Financial Intelligence Units, will participate in the Working Group and Plenary meetings in Paris, it added.

On the conclusion of the two-day deliberations, decisions of the plenary would be announced.

The plenary will also focus on jurisdictions identified as presenting a risk to the international financial system, with an update to public statements that identify jurisdictions as high risk or being subject to increased monitoring besides other key issues, including guidance on improving beneficial ownership transparency to prevent shell companies and other opaque structures from being used to launder illicit funds.

Pakistan was included among jurisdictions under increased monitoring list in June 2018 for deficiencies in its legal, financial, regulatory, investigations, prosecution, judicial and non-government sector to fight money laundering and combat terror financing considered serious threat to global financial system.

Much-awaited decision to be announced after two-day deliberations in Paris

Islamabad made high-level political commitments to address these deficiencies under a 27-point action plan. But later the number of action points was enhanced to 34. The country had since been vigorously working with FATF and its affiliates to strengthen its legal and financial systems against money laundering and terror financing to meet international standards in line with 40-recommendations of the FATF.

A 15-member joint delegation of the FATF and its Sydney-based regional affiliate — Asia Pacific Group — paid an onsite visit to Pakistan from Aug 29 to Sept 2 to verify the country’s compliance with the 34-point action plan committed with the FATF.

The authorities that had kept the countrywide visit of the delegation low profile later termed it “a smooth and successful visit”. The delegation had detailed discussions with relevant agencies pursuant to the authorisation of Onsite Visit by FATF Plenary in June 2022. According to the Foreign Office, the focus of the visit was to validate on ground Pakistan’s high-level commitment and sustainability of reforms in AML/CFT regime and [it] looked forward to logical conclusion to the evaluation process. The report of FATF Onsite team will be discussed in FATF’s International Cooperation Review Group and plenary meetings.

Pakistan believed that as a result of strenuous and consistent efforts over the past four years, it has not only achieved a high degree of technical compliance with FATF standards but also ensured high level of effectiveness through implementation of two comprehensive FATF action plans.

In June this year, FATF had found Pakistan “compliant or largely compliant” on all the 34 points and had decided to field an onsite mission to verify it on ground before formally announcing the country’s exit from the grey list that finally took place in August and September.

In terms of technical compliance with FATF standards, Pakistan has been rated by APG as “compliant or largely compliant” in 38 out of 40 FATF recommendations in August this year, which placed the country among the top compliant countries in the world.

The completion of FATF/APG action plan for effectiveness of AML/CFT was also structural benchmark of the IMF for end-March 2022 and was achieved in June with a minor delay. The government had given a commitment to the IMF to review by end-June 2022 the implementation of AML/CFT controls by financial institutions with respect to the tax amnesty programme for the construction sector and promised to “meet the timelines for the implementation of APG’s 2021 Action Plan, including on the mutual legal assistance framework, AML/CFT supervision, transparency of beneficial ownership information, and compliance with targeted financial sanctions for proliferation financing”.

Published in Dawn, October 17th, 2022

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