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FATF asks Pakistan to complete action plan by October

Top Story

June 22, 2019

WASHINGTON: The Financial Action Task Force (FATF) has strongly urged Pakistan to swiftly compete its promised action plan by October this year to avoid serious repercussions. t the conclusion of the week-long meeting yesterday in Orlando, Florida, the FATF expressed strong concerns that Pakistan has failed to complete its assigned action plan items twice already, once in January and the second time in May.

It also asked Islamabad to swiftly complete its action plan by October 2019, when the last set of action plan items are set to expire. "Otherwise, the FATF will decide the next step at that time for insufficient progress," the FATF said hinting at placing Pakistan on its blacklist.

Last year in June, Pakistan was placed on the 'grey list' of the international terror financing watchdog and given a 27 points action plan. The grey list is a warning given to a countrywhen it fails to curb terror funding and money laundering. Since then Pakistan made a high-level political commitment to work with the FATF and Asia Pacific Group to strengthen its Anti-Money Laundering and Combating the financing of terrorism and proliferation standards and to address its strategic counter-terrorist financing-related deficiencies.

Pakistan has taken steps towards improving its AML/CFT regime, including the recent development of its Terror Financing risk assessment addendum, according to FATF adding, "However, it does not demonstrate a proper understanding of Pakistan’s transnational Terror Financing risk."

The continuation in the 'grey list' means its facing serious hardships from international financial institutions. Blacklisting could further deteriorate the economic and financial situation. India, the co-chair of the joint group of FATF and the Asia Pacific Group, along with the United States and United Kingdom, has been campaigning to ensure Islamabad ends up in FATS's blacklist, claiming that the country has failed to meet international standards in combating financial crimes and terror financing.

In a statement sent to The News, after the meeting was over, the FATF suggested at least ten-points for Pakistan to continue working on implementing its action plan to address its strategic deficiencies.

The points included: (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 and understanding the risk of cash couriers being used for TF; (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 persons and entities 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; and (8) 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.

Earlier, Pakistan has managed to secure support from China, Turkey, Malaysia, GCC and some of important European countries in order to avert falling into blacklist at Financial Action Task Force (FATF) plenary meeting held at USA.

Pakistan’s delegation attended FATF plenary meeting held at Orlando USA from June 16 to 21 under Director General Financial Monitoring Unit (FMU) Mansoor Hassan Siddiqui.

The proposal to blacklist Pakistan was made by India and supported by USA, Israel and Russia largely. However, as there was a number of countries saying Pakistan has made some progress, giving its political commitment therefore status quo be maintained and discussions on next steps should be made in next meeting where Pakistan’s progress will be considered and its Actions Plan will be completed.

This review will be based on analysis of Asia Pacific Joint Group. So authorities will need to deliver on all the Action items. Its very important and key areas of focus will be Terror Financing Risk Assessment by NACTA, Sectoral Risk Assessment of Cash Smuggling by FBR, interagency coordination by NACTA, investigations prosecution and convictions by LEAs particularly FIA and CTDs, actions against illegal channels Hawala & Hundi by FIA in coordination with SBP, supervisory actions by regulators, freezing of assets of proscribed entities of concern by authorities and strategy to manage these assets by authorities etc.

According to statement issued by Finance Ministry on Friday night stating that the Plenary Meeting of Financial Action Task Force (FATF) took place at Orlando, USA, from June 16-21, 2019. The meeting reviewed the compliance of a number of countries, including Pakistan with the international standards on Anti-Money Laundering and Counter Financing of Terrorism (AML-CFT).

Pakistan was placed by FATF in its Compliance Document in view of an Action Plan agreed with Pakistan in June 2018 to strengthen its AML/CFT Regime. FATF reviewed progress made by Pakistan towards the implementation of the Action Plan. It acknowledged the steps taken by Pakistan to improve its AML/CFT regime and highlighted the need for further actions for implementing the Action Plan. FATF will undertake the next review of Pakistan’s Progress in October 2019.

The government of Pakistan reiterates its commitment to take all necessary measures to ensure completion of the Action Plan in a timely manner, the official statement concluded.

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