Parliament and the FATF

 
July 09, 2020

The Covid-19 pandemic has been instrumental in giving Pakistan a breather at the Financial Action Task Force . Thankfully, Pakistan still has a couple of months to pass amendments to the Anti Money...

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The Covid-19 pandemic has been instrumental in giving Pakistan a breather at the Financial Action Task Force (FATF). Thankfully, Pakistan still has a couple of months to pass amendments to the Anti Money Laundering (AML) and Foreign Exchange Regulations laws. Parliament must pass these laws to comply with the FATF conditions. Due to Covid-19, the FATF extended the deadline for Pakistan till the next plenary meeting that it will hold in October 2020. It is surprising that despite the breather, the government did not act promptly to address the concerns. For example, when the director general of the financial monitoring unit (FMU) died a few months back, the government should have appointed his replacement immediately keeping in mind the sensitivity of the matter and the fast pace required to act in the right direction in accordance with the expectations of the FATF.

Now that the government has appointed the executive director of the State Bank of Pakistan as new DG of the FMU, some progress is likely in the coming days. The government did have an option to incorporate some amendments related to the Anti-Terrorism Act and AML as part of the finance bill of the budget, but the government decided to pass separate legislation in the parliament. To comply with the FATF requirements, the government also needs to change some income-tax laws for non-profit organizations and trusts. We must stress that time is running out fast as the FATF had placed Pakistan on the grey list in June 2018, and we have been in the grey area for over two years now. The FATF wanted Pakistan to fulfil its 27 conditions within 15 months by September 2019. Luckily, we have enjoyed three back-to-back extensions of three months each.

Pakistan has been able to show our full compliance on 14 of the 27 points so far, and the remaining have to be complied with by the end of this quarter. If we are unable to fulfil the requirements on the remaining 13 points, Pakistan’s exit from the grey list will once again be in jeopardy. The watchdog body has made it clear time and again that Pakistan needs to ensure full compliance with all the actionable points. We need a comprehensive process for legislative, operational, and technical improvements, without which it will be an uphill task for us to remove the grey blot. We also need better investigation and prosecution to show better results. Now that a joint session of parliament is planned this month, the FATF-related bills must be on the agenda for legislation. In the joint session, the government and the opposition should come together to facilitate the FATF-related legislation for swift passage.



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