FATF response

As per reports, the Financial Action Task Force (FATF) does not seem happy with Pakistan’s efforts to control financial crime. After two weeks of meetings with officials, the visiting nine-member FATF team is set to submit a non-compliance report based on gaps in the implementations of its recommendations. The major gaps are around anti-money laundering, regulation of non-profits, and financial monitoring units. The report, based on interviews with government officials, was shared with Pakistani authorities and once again Pakistan has been told to ‘do more’. One would wonder, though, if there is enough will to do what is required to get Pakistan out of the ‘grey list.’ FATF officials are not happy with the response of major departments, including the FIA, NAB, FBR, FMU and SECP. One of the key questions has been the issue of why most criminal cases against money laundering are exonerated in the court system. The FBR has been reluctant to talk about such cases. The poor preparation on the Pakistani side was well-documented earlier – and the failure of government departments to provide reasonable responses on the actions taken and how they plan to improve in the future.

The report is likely to suggest another set of steps and if Pakistan wants to avoid being ‘black-listed’ in an already difficult economic situation, it will have to take these steps seriously. The country still has around a year to be able to show a significant improvement. The report will present 40 recommendations, segregated in 11 performance benchmarks. As it stands, it seems most government officials are confused over what Pakistan needs to do to come out of the grey list. Pakistani officials feel like they are compliant in over 50 percent of the recommendations. The confusion may explain why the FATF committee feels there is a ‘lack of will’ on the part of the government.

The trouble is that most departments seem committed to a ‘least common denominator’ approach to dealing with the FATF recommendations. All departments have tried to do the least they can to clear the benchmarks – which might work for the eyes of the cabinet, but it has not stood the test in front of the FATF committee. Getting Pakistan out of the ‘grey list’ should be a priority but it cannot be done without all departments pulling their weight. The FATF review meeting should serve as a warning. Pakistan has 15 days to file its own response to the finding. Another delegation will visit Pakistan in March-April next year. Pakistani authorities must understand that we need to improve our performance – or else Pakistan risks falling into the ‘black list.’