Clock ticking on FATF action plan implementation

10 out of the 27 listed actions must be fulfilled by January

ISLAMABAD: A meeting of the Financial Action Task Force (FATF) is just weeks away but Pakistan is still grappling to cope with a critical deficiency in its legal regime that could leave a question mark over the country’s demonstrable capacity to seize properties of terrorist organisations.

The problem has arisen because of conflicting positions that Pakistan took before the FATF in earlier meetings about its legal regimes with regard to the freezing real estate assets of proscribed organisations, said sources in the Ministry of Finance.

The conflicting position suggests incompetence of the team that negotiated with the FATF. The government is trying to address the issue before the upcoming ‘face-to-face’ meeting of the International Cooperation Review Group (ICRG) of the FATF, scheduled for the first week of January.

Finance Minister Asad Umar has held numerous meetings on the implementation status of the 27-point action plan of the FATF, said the sources. Out of these 27 actions, Pakistan is required to deliver on 10 points by January 2019.

The sources said at least two action points are directly related to the issue of seizure of real estate assets of proscribed organisations.  But the authorities are hopeful that all the 10 action plans will be completed well before the time.

One of the outstanding issues is the right legal regime to freeze immovable assets of terror outfits. One view was that Pakistan can fulfill this obligation under the UN Security Council Act of 1948. But the other view was that the government may have to amend this law to cover some of the deficiencies.

In order to address the legal lacuna, the government may have to promulgate an ordinance as it lacks majority in the upper house of the parliament

With effect from June this year, the FATF has placed Pakistan on the grey list of the countries that have deficiencies in their legal regime meant to combat money laundering and terror financing.

The country will have to deliver on all the 27 points by September next year. In case it fails, Pakistan can be blacklisted, which carries serious financial implications.

Pakistan will have to technically comply to “demonstrate a comprehensive legal obligation to implement recommendation on targeted financial sanctions without delay, both asset freezing and ongoing prohibitions to provide funds and financial services,” says the Immediate Outcome of 10 (a).

This must include powers to take control of the funds or other assets and prevent the raising and moving of funds by the UN-designated persons.

The Immediate Outcome 10 (f) states that by January 2019, Pakistan will also have to demonstrate effective implementation of targeted financial sanctions against the assets of UNSC Resolution number 1267 and 1373 designated persons and entities and their affiliates.

These include Da’ish, Al Qaida, Falahi Insaniyat Foundation (FIF), Jamaat-ud-Dawa, Lashkar-e-Taiba, Jaish-e-Mohmmad, Haqqani Network and persons affiliated with the Taliban.

The last Pakistan Muslim League-Nawaz (PML-N) government had promulgated the Anti-Terrorism (Amendment) Ordinance, 2018 to address the legal deficiency.

However, the sources said that there was no need for the Ordinance at that time as the UNSC Act of 1948 and its Statutory Regulatory Orders (SROs) provided sufficient legal basis to implement UNSCR Resolution 1267. After promulgation of the Ordinance, which has already lapsed, Pakistani authorities claimed before the ICRG that the ordinance provided base for freezing real estate assets.

The sources said subsequent to the ICRG Joint Group face-to-face meeting in May 2018, Pakistan reported that under the UNSC Act 1948, it was still possible to freeze all assets including moveable and immoveable.

Pakistan then took a position that that the purpose of the amendment in the Anti-Terrorism Act was to facilitate enforcement actions by law enforcement agencies against the persons and entities that were violating the sanctions, especially registering and prosecuting cases in the courts.

The UNSC Act of 1948 states that the federal government to apply any measures, not involving the use of armed force, to give effect to any decision of the UNSC and may by order published in the official Gazette, make such provisions (including provisions having extra-territorial operation) as appear to it necessary or expedient for enabling those measures to be effectively applied, and without prejudice to the generality of the foregoing power, provision may be made for the punishment of persons offending against the order.

The sources said these were comprehensive legal powers and the Pakistani authorities should not have changed their position on the issue. They said Pakistan was well-positioned to present its case in the next FATF meeting and there would not be any major issue.

They said due to measures taken during past nine months, Pakistani law enforcement agencies and other regulatory bodies are in a better position to assess the terrorism financing risks.