Pakistan remains on FATF grey list, given new 6-point action plan

PARIS/ISLAMABAD: The Financial Action Task Force (FATF) on Friday retained Pakistan on its “grey list” of countries under increased monitoring, and suggested to the government to address six new areas focused primarily on curbing money laundering.

The FATF is an international organisation that coordinates global efforts to crack down on money laundering and terrorism financing. The decision comes days after Foreign Minister Shah Mehmood Qureshi said there was no more justification for the body to keep the country on the list.

At the end of the FATF plenary, which ran from June 20-25, FATF President Marcus Pleyer said Pakistan remains under “increased monitoring” but acknowledged the “substantial progress” the country has made for largely addressing 26 of the 27 points of the action plan.

He said the one key action item still needs to be completed, “which concerns the investigation and prosecution of senior leaders and commanders of UN-designated terror groups”. The FATF’s next plenary will be in October this year.

The FATF president said Pakistan has made improvements after the Asia Pacific Group highlighted issues in 2019 during its assessment of Pakistan’s entire anti-money laundering and counterterrorist financing system. “However Pakistan is still failing to effectively implement the global FATF standards across a number of areas. This means the risks of money laundering remain high which in turn can fuel corruption and organised crime,” he said.

Dr Player said that this is why the FATF has worked with the Pakistan government on new areas that still need to be improved as part of a new action plan that largely focuses on money laundering risks.

In details of the decisions on the FATF website, the watch dog wants the country to address its strategically important AML/CFT deficiencies, namely by: (1) enhancing international cooperation by amending the Mutual Legal Assistance (MLA) law; (2) demonstrating that assistance is being sought from foreign countries in implementing UNSCR 1373 designations; (3) demonstrating that supervisors are conducting both on-site and off-site supervision commensurate with specific risks associated with Designated Non-Financial Businesses and Professions (DNFBPs), including applying appropriate sanctions where necessary; (4) demonstrating that proportionate and dissuasive sanctions are applied consistently to all legal persons and legal arrangements for non-compliance with beneficial ownership requirements; (5) demonstrating an increase in ML investigations and prosecutions and that proceeds of crime continue to be restrained and confiscated in line with Pakistan’s risk profile, including working with foreign counterparts to trace, freeze, and confiscate assets; and (6) demonstrating that DNFBPs are being monitored for compliance with proliferation financing requirements and that sanctions are being imposed for non-compliance.

“This is about helping authorities stop corruption and prevent organised criminals from profiting from their crimes and undermining the financial system and legitimate economy in Pakistan,” Dr Pleyer added.

The FATF said 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 counterterrorist financing-related deficiencies, Pakistan’s continued political commitment has led to significant progress across a comprehensive CFT action plan.

“The FATF recognises Pakistan’s progress and efforts to address these CFT action plan items and notes that since February 2021, Pakistan has made progress to complete two of the three remaining action items on demonstrating that effective, proportionate and dissuasive sanctions are imposed for TF convictions and that Pakistan’s targeted financial sanctions regime was being used effectively to targeted terrorist assets.

“Pakistan has now completed 26 of the 27 action items in its 2018 action plan. The FATF encourages Pakistan to continue to make progress to address as soon as possible the one remaining CFT-related item by demonstrating that TF investigations and prosecutions target senior leaders and commanders of UN designated terrorist groups.”