FATF actions plan: Report identifies primary sources of terror funding

Enemies funding sub-national terrorist groups in country, NEC meeting told

Shahbaz Rana December 19, 2018

ISLAMABAD: There are half a dozen primary sources of terror financing, having roots both in Pakistan and across the borders, says a Terrorism Financing Risk Assessment report that the government approved on Tuesday.

The report also says hostile agencies are fueling terrorism in Pakistan by providing funding to sub-national terrorist groups. It identifies foreign funding, drug trafficking, kidnapping for ransom, extortion, robbery and bank heists as primary sources of funding in Pakistan.

The report has been prepared as part of implementation on 27-point action plan that the Financial Action Task Force (FATF) handed over to Pakistan as a prerequisite to exit from its grey list.

It was presented in a meeting of the National Executive Committee (NEC) on Anti Money Laundering, which is chaired by Finance Minister Asad Umar. “After detailed deliberations on various aspects of the assessment report, the NEC approved the same subject to addressing certain observations in respect of key policy and legislative areas,” said a handout issued by Finance Ministry.

The report will now be presented in a face-to-face meeting of the Asia Pacific Joint Group that will meet early next week in Australia. The Asia Pacific Group will then present Pakistan’s case in the FATF meeting, taking place in February 2019.

The FATF has given Pakistan nine-month deadline to implement the action plan. Out of these 27 actions, Pakistan is required to deliver on 10 points by January 2019. The authorities insist that it has met most of the actions, although some actions remain pending.

Pakistan believes that it has been made victim of international politics. The government’s positive role in bringing the Taliban and the US to the negotiating table may help ease international pressure on it.

It is the first comprehensive risk assessment report that has been jointly prepared by the National Counter Terrorism Authority (Nacta) and the Federal Investigation Agency (FIA). The report has identified sources of terror financing and given recommendations for plugging these loopholes.

The role of the law enforcement agencies was critical to implement these recommendations, particularly to curb the sources of terror financing, the sources said. During next six months Pakistan will implement these recommendations by adopting the risk-based approach.

The report has listed the role of foreign intelligence agencies, particularly belonging to Pakistan’s two eastern and western neighbours, in fueling terrorism in Pakistan. These hostile agencies are involved in sabotage activities in Balochistan and Sindh.

Pakistani intelligence agencies have already captured an Indian spy. In order to minimise the infiltration of the terrorists, Pakistan has already started fencing its borders with Afghanistan,

The National Counter Terrorism Authority (Nacta) made a detailed presentation on the terrorist financing risk assessment, said the Finance Ministry. The NEC also approved the Risk Assessment Report on cash smuggling prepared by the Federal Board of Revenue (FBR)-Customs.

The terror financing through crypto currency is also one of the areas and the State Band of Pakistan (SBP) has already barred the financial institutions in dealing with crypto currency. However, Pakistan needs to give it a legal cover.

The Law Minister Farogh Naseem briefed the NEC about progress on the Mutual Legal Assistance (MLA) framework agreements. The FIA informed the meeting about actions that it has taken to curb hawala business and action against bit-coin currency dealers.

The Financial Monitoring Unit (FMU) presented an analysis on suspicious transaction reports filed by the financial sector in the last three years and the law enforcement actions against taken money laundering and terror financing on the basis of such reports, said the Finance Ministry.

The NEC advised the authorities concerned to enhance enforcement actions and adopt a result oriented approach, the ministry added. The NEC chairman advised all departmental heads to regularly monitor timely implementation of the FATF Action Plan.

The need for a coordinated effort with the provinces was also highlighted.

The meeting was attended by foreign minister, law minister, minister of state for interior, SBP governor, the Securities and Exchange Commission of Pakistan (SECP) chairman, the FIA director general, Nacta director general, FBR Customs director general, FMU director general and other senior officials.

The SECP has also notified changes in the Intermediaries (Registration) Regulations, 2017 aimed at implementing the FATF requirements.  The Anti-Money Laundering Act, 2010, places compliance obligations on the company service providers (intermediaries) to conduct customer due diligence and report suspicious transactions to Financial Monitoring Unit (FMU).

The amended regulations will require compliance by the intermediaries with the AML/CFT regime. So far, 193 intermediaries have been registered with the SECP under the Companies Act, 2017.