Pakistan to focus on buying more time in FATF meeting

ISLAMABAD: Minister of State for Economic Affairs Hammad Azhar and his team will defend Pakistan’s performance on 22 points at FATF's (Financial Action Task Force) joint group meeting starting today (Tuesday) in Beijing, with a focus on buying more time, The News learnt on Monday.

This face-to-face meeting will continue for three days (January 21 to 23) in which Pakistan’s 17 member delegation is participating with the objective to defend its compliance report on 22 major action plan points given by FATF review to gauge the performance of the country for combating money laundering and terror financing.

On the other hand, the FATF’s upcoming plenary meeting is expected to be held next month probably in Paris where Pakistan faces three possibilities i.e., either exclusion from the grey list and placement on the white, or the grey-list status quo for up to June or September 2020, or blacklisting in the worst case scenario. It is highly undesirable to see the country landing on the blacklist because of its far-reaching negative impacts foreign inflows.

Pakistan in its compliance report apprised the joint group of FATF that as many as 500 terror-financing-related cases had been registered in Pakistan, out of which 55 ended up in conviction in the courts of law.

“The State Bank of Pakistan imposed penalties on defaulting banks and statutory sanctions regime was implemented. The mandatory currency declaration scheme was also implemented at all airports of the country,” the FATF was informed.

The global terror-financing watchdog was also informed that under the new reforms madrassas were granted the status of schools, where students would now be awarded matriculation and intermediate education certificates. “The dispensaries running by banned outfits were taken over by Health Departments,” the FATF was informed.

The country had dispatched its 120-page detailed reply along with annexure details of 500 pages to the Joint Group of FATF for sharing progress on 22 points.

The FATF in the last plenary meeting had shown satisfaction over 5 points of the action plan out of a total 27 and kept the country on the grey list up to February 2020.

“Pakistani authorities are expecting the FATF plenary meeting will show satisfaction over more action plans,” said the sources and added that it any judgment right now would be premature, but one thing was crystal clear that the country was making progress towards implementing all points of FATF action plan.

Pakistan is expecting that the FATF may grant another relaxation probably up to June or September 2020 in its upcoming plenary review meeting, as the February deadline is too short a period for Pakistan to comply with all remaining 22 points of the action plan.

Pakistan has so far successfully managed to avoid the blacklist due to diplomatic support from China, Turkey, Malaysia, Saudi Arabia and Middle East countries. India had failed to convince the world powers that Pakistan was not cooperating with the watchdog. Now Pakistan required just three votes out of a total 39 members of FATF forum to avoid falling into blacklist.

The joint working group of the FATF had declared Pakistan as largely compliant on 10 points, but the FATF plenary meeting accepted Islamabad’s compliance only on five points out of 27.

The FATF said all deadlines in the action plan had now expired. Noting recent improvements, the FATF again expressed serious concern over the overall lack of progress by Pakistan to address its terrorist financing risks, including remaining deficiencies in demonstrating a sufficient understanding of its transnational terror-financing risks, and more broadly, the country’s failure to complete its action plan in line with the agreed timelines and in light of the terror-financing risks emanating from the jurisdiction.

Pakistan has only largely addressed five of 27 action items, with varying levels of progress made on the rest, while the FATF has strongly urged the country to swiftly complete its full action plan by February 2020.

“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 (financial institutions) to give special attention to business relations and transactions with Pakistan,” the FATF stated in its previous statement.