PARIS/ PANAMA CITY: Pakistan has until October to improve its counter-terror financing operations in line with an internationally agreed action plan or face actions against it, a global watchdog said on Friday.
The Financial Action Task Force said it was concerned that Pakistan had failed to complete the action plan first by a January deadline and then again by a May deadline.
"The FATF strongly urges Pakistan to swiftly complete its action plan by October 2019 when the last set of action plan items are set to expire," the FATF said in a statement.
"Otherwise, the FATF will decide the next step at that time for insufficient progress," it said after a meeting in Orlando, Florida.
The FATF already has Pakistan on its "grey list" of countries with inadequate controls over curbing money laundering and terrorism financing. But India wants Pakistan blacklisted, which would likely result in sanctions.
The meeting besides discussing a host of other issues reviewed Pakistan’s progress of its action plan to deal with terror financing and money laundering.
Pakistan has been on the global body’s grey list since June 2018 for inadequate measures to curb terror financing.
Islamabad had agreed to take a number of steps to curb terror financing under the action plan. The first review of the action plan took place in January where FATF expressed dissatisfaction and extended the deadline till May to comply with a set of recommendations.
Now member countries in its latest review noted that “the FATF expresses concerns that not only did Pakistan fail to complete its action plan items by January deadlines, it also failed to complete its action plan items due in May 2019”.
“The FATF strongly urges Pakistan to swiftly complete its action plan by October 2019 when the last set of action plan items is set to expire. Otherwise, the FATF will decide the next step at that time for insufficient progress,” the statement reads.
The next meeting of the FATF is scheduled to take place in Paris in October where the body will review Pakistan’s case and decide what action can be taken if member countries still find the progress unsatisfactory.
In its latest review, the FATF noted that Pakistan in June 2018 made a high-level political commitment to work with the organisation and the Asia Pacific Group (APG) to strengthen its anti-money laundering (AMT) and counter-terror financing (CTF) regime and address its strategic “counter-terrorist financing related deficiencies”.
Pakistan, it pointed out, did take steps towards improving its AML/CFT regime, including the recent development of its terror financing risk assessment addendum.
“However, it does not demonstrate a proper understanding of Pakistan’s transnational terror financing risk,” the FATF added.
Based on the review, FATF has identified 10 specific areas where it urged Pakistan to continue to work in implementing its action plan to address its strategic deficiencies.
They include, 1) adequately demonstrating its proper understanding of the terror financing 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.
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 terror financing.
5) Improving inter-agency coordination -- including between provincial and federal authorities on combating terror financing risks.
6) Demonstrating that law enforcement agencies are identifying and investigating the widest range of terror financing activity and that terror financing investigations and prosecutions target designated person and entities and person and entities acting on behalf or at the direction of the designated person or entities.
7) Demonstrating that terror financing prosecutions result in effective, proportionate and dissuasive sanctions and enhancing capacity and support for the prosecutors and the judiciary.
8) Demonstrating effective implementation of targeted financial sanctions (supported by comprehensive legal obligations) 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 (moveable and immoveable) and prohibiting access to funds and financial services.
9) Demonstrating enforcement against terror financing 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.
Following the FATF ultimatum, the finance ministry said the government committed to take all necessary measures to ensure completion of the action plan in a timely manner.
The statement confirmed that the FATF would undertake the next review of Pakistan’s progress in October 2019.
It said the FATF 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 the FATF in its Compliance Document in view of an action plan agreed with Pakistan in June 2018 to strengthen its AML/CFT regime,” it noted.
The ministry insisted that the FATF acknowledged the steps taken by Pakistan to improve its AML/CFT regime and highlighted the need for further actions to implement the action plan.
With additional input from our correspondent in Islamabad