Pakistan has accelerated ‘diplomatic efforts’ as part of preparation ahead of meeting with the global financial watchdog Financial Action Task Force’s (FATF) Working Group in Beijing on January 20-21.
Pakistan will be judged by an FATF plenary next month on the basis of the Joint Group’s report for possible exit from the grey list or at least avoiding the entry into the black list.
Federal Minister for Economic Affairs Hammad Azhar has been himself monitoring the contacts with FATF member states.
An 18-member delegation will present Pakistan’s performance report from Oct. 2019 till Jan. 2020 in compliance with the FATF Action Plan’s 27 recommendations concerning Anti-Money Laundering (AML) and countering the financing of terrorism (CFT) system.
Pakistan has already sent a 650-page report to the global financial watchdog, and it will be considered by the body’s meeting starting from Feb. 16 in Paris.
Sources familiar with the matter expressed a possibility that voting might be done to consider Pakistan’s exit from the grey list.
The FATF had demanded Pakistan to sentence those who had been associated with the banned outfits and summoned copies of cases lodged against those organisations.
Details were also sought about legal steps taken concerning religious seminaries, action against money laundering, and transfer of funds, assets and jewelry in the name of terrorists.
Pakistan has forwarded all required particulars to the FATF while noting that investigations into 700 cases concerning transfer of funds to militants were ongoing.
Officially, the FATF had noted that since June 2018, when Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies, “Pakistan has made progress towards improving its AML/CFT regime, including the recent development of its ML/TF risk assessment.”
“At the October 2019 plenary, Pakistan reiterated its political commitment to completing its action plan and implementing AML/CFT reforms. Pakistan should continue to work on implementing its action plan to address its strategic deficiencies, including by:
1. Adequately demonstrating its proper understanding of the TF risks posed by the terrorist groups, and conducting supervision on a risk-sensitive basis;
2. Demonstrating that remedial actions and sanctions are applied in cases of AML/CFT violations, and that these actions have an effect on AML/CFT compliance by financial institutions;
3. Demonstrating that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS);
4. Demonstrating that authorities are identifying cash couriers and enforcing controls on illicit movement of currency;
5. Improving inter-agency coordination including between provincial and federal authorities on combating TF risks;
6. Demonstrating that law enforcement agencies (LEAs) 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;
7. Demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions and enhancing the capacity and support for prosecutors and the judiciary;
8. And demonstrating effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all 1267 and 1373 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;
9. Demonstrating enforcement against TFS violations including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases;
10. Demonstrating that facilities and services owned or controlled by designated person are deprived of their resources and the usage of the resources.
Importantly, the body noted that all deadlines in the action plan were expired.
While noting recent improvements, the FATF again expressed serious concerns with the overall lack of progress by Pakistan to address its TF risks, including remaining deficiencies in demonstrating a sufficient understanding of Pakistan’s transnational TF risks, and more broadly, “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.”
It had pointed out that, “To date, Pakistan has only largely addressed five of 27 action items, with varying levels of progress made on the rest of the action plan. The FATF strongly urges Pakistan to swiftly complete its full action plan by February 2020.”
“Otherwise, should significant and sustainable progress not be made across the full range of its action plan by the next Plenary, the FATF will take action, which could include the FATF calling on its members and urging all jurisdictions to advise their FIs to give special attention to business relations and transactions with Pakistan.”
On the other hand, Pakistan hopes to win a “largely-compliant” rating from the FATF on the implementation of its 27 action points, which might help the government get more time from the watchdog for full compliance.