The Financial Action Task Force (FATF), while acknowledging the significant progress made by Pakistan pertaining to its action plan, has refused to remove the country from the grey list.
The FATF has asked Islamabad to address its strategic counter-terrorist financing-related deficiencies in order to get off the list. It added that Pakistan has completed 26 of 27 action items in its 2018 FATF action plan.
This was announced after the fourth plenary of the FATF held from June 21 to 25.
In June 2018, the global watchdog had placed Pakistan on the grey list over Islamabad’s failure to curb money laundering and terror financing. Since then, Pakistan has been struggling to get out of the list by working on the FATF action plan.
According to a document available with The Correspondent, the FATF has asked Pakistan to effectively prosecute the leaders of the UN-designated terror outfits. The FATF has urged Pakistan to address the “one remaining CFT-related item” by demonstrating that its anti-terror financing measures are focused on the prosecution of the leaders of the UN-designated terror outfits.
According to the document authored by International Country Risk Guide (ICRG) Co-Chairs, “Since June 2018, Pakistan made a high-level political commitment to work with FATF and APG to strengthen it AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies, Pakistan’s continued political commitment has led to significant progress across a comprehensive CFT action plan.”
“The FATF recognises Pakistan’s progress and efforts to address the CFT action plan items and notes that since Feb 2021, Pakistan has made progress to complete 2 of the 3 remaining action items on demonstrating that effective, proportionate and dissuasive sanctions are imposed for TF convictions and that Pakistan’s targetted financial sanction regime was being used effectively to target terrorists’ assets,” the ICRG added.
FATF also gave another six-point action plan pertaining to the Mutual Evaluation Report(MER) process. “In response to additional deficiencies later identified, in Pakistan’s 2019 APG Mutual Evaluation Report (MER), Pakistan has made progress to address a number of the recommended actions in the MER and provided further high-level commitments in June 2021 to address these strategic deficiencies pursuant to a new action plan that primarily focuses on combating money laundering,” it added.
“Pakistan should continue to work to address its strategically important AML/CFT deficiencies, namely by: (1) enhancing international cooperation by amending the MLA law; (2) demonstrating that assistance is being sought from foreign countries in implementing UNSCR 1373 designations; (3) demonstrating that supervisors are conducting both on-site and off-site supervision commensurate with specific risks associated with DNFBPs, including applying appropriate sanctions where necessary; (4) demonstrating that proportionate and dissuasive sanctions are applied consistently to all legal persons and legal arrangements for non-compliance with beneficial ownership requirements; (5) demonstrating an increase in ML investigations and prosecutions and that proceeds of crime continue to be restrained and confiscated in line with Pakistan’s risk profile, including working with foreign counterparts to trace, freeze, and confiscate assets; and (6) demonstrating that DNFBPs are being monitored for compliance with proliferation financing requirements and that sanctions are being imposed.”
Since its placement on the anti-terror list, over 900 properties of proscribed organisations have been taken over by the state machinery. Similarly, individuals of concern — Hafiz Saeed, Zakiur Rehman Lakhvi, Yahya Mujahid, Professor Zafar Iqbal, Hafiz Abdus Salam and others — have also been prosecuted by the government.
Pakistan has overhauled its laws pertaining to anti-money laundering and terror financing by introducing harsher punishments for those found involved in corrupt and illicit practices. Moreover, the country has also proposed strict monitoring of imports and exports to curb the illegal flow of wealth in its recent finance bill.
GOVT RESPONDS TO FATF DECISION:
In a press release, the Finance Ministry said: “The Plenary discussion on Pakistan focused on three main areas: Pakistan’s Technical Compliance, ICRG Action Plan and Post Observation Period Report (POPR).”
“On Technical Compliance, FATF appreciated Pakistan’s commitment and efforts in seeking upgrades in a number of recommendations and expected that Pakistan would continue same momentum.
“Regarding 2018 Action Plan, the FATF recognised considerable progress made by Pakistan on action plan and Pakistan’s high-level commitment. Pakistan has now completed 26 of the 27 Action Plan items. The FATF, after discussion, decided to retain status quo for Pakistan i.e. countries in increased monitoring for 2018 TF Action Plan, for remaining one action plan item. Pakistan is confident that the remaining action item would be completed before FATF’s next Plenary scheduled in October 2021.
“In relation to POPR, FATF acknowledged Pakistan’s significant progress and continuation of Pakistan’s high-level commitment. A total of 82 deficiencies were highlighted in Pakistan’s 2019 MER which were included in the POPR as 67 recommended actions in 11 IOs, on which Pakistan reported progress. As a result of the progress made since the MER 2019, the FATF approved a 7 points ML centric action plan to be implemented by Pakistan. Pakistan has already provided its political commitment to FATF for implementation of the new Action Plan.
“During FATF Plenary, there was a broader consensus on Pakistan’s continued efforts and progress on implementation of TF Action Plan as well as MER Recommended Actions. There was a complete consensus among the membership regarding Pakistan’s unprecedented achievements in FATF.
