FATF trouble unlikely to go away soon

Out of 40 universal recommendations, Pakistan's rating was poor on nearly two dozen

ISLAMABAD: In its mutual evaluation of Pakistan, the Asia-Pacific Group has again identified deficiencies in anti-money laundering and combating terror financing regimes, which may keep Islamabad on grey list for an extended period and may need a new around 150-point Action Plan to exit.

The APG on Money Laundering on Wednesday adopted Pakistan's Mutual Evaluation Report (MER) during a meeting held in Canberra, Australia, announced the Ministry of Finance after the meeting outcomes.

A senior level delegation, headed by Dr Reza Baqir, Governor State Bank of Pakistan, attended the meeting.

Out of 40 universal recommendations of Financial Action Task Force (FATF), Pakistan's rating was poor on nearly two dozen recommendations and performance was also below par as against 11 Immediate Outcomes, said sources in the Ministry of Finance.

Pakistan faced problems in non-financial sector and enforcement of actions by law-enforcement agencies (LEAs), said sources who have remained engaged in this process.

APG assured of strict financial checks at provincial, district levels

"The MER covers the period from February to October 2018 and identifies a number of areas where further actions are required to strengthen the AML/CFT framework", stated the Finance Ministry. The mutual evaluation process is separate from the FATF’s grey listing.

The Mutual Evaluation Report along with implementation on an ongoing 27-point Action Plan will now be tabled before the FATF Plenary, to be held in October, according to sources in the Ministry of Finance.

The implementation on an ongoing 27-point FATF action plan was going to end in September and the final review was planned in October.

However, approval of any new and more comprehensive Action Plan by the FATF on the basis of Mutual Evaluation would mean that Pakistan may stay on the grey list at least from one year to two years.

The sources said that the FATF plenary is set to hand Pakistan over a new Action Plan, which unlike the FATF June 2018 plan will be more comprehensive and cover all 11 Immediate Outcomes.

The authorities' assessment was that as against 27-point Action Plan, the new Plan may contain over 150 conditions.

It was the third mutual evaluation of Pakistan since 2009, which shows the successive governments and army did not do much to improve the situation.

The FATF has already grey-listed Pakistan with effect from June 2018 and adverse findings by the APG would keep Islamabad on the radar of the global and regional bodies working to curb money laundering and terrorism financing.

The authorities believe that full implementation of such a comprehensive plan will require at least two more years. However, nothing can be said with surety until the FATF October Plenary that will determine the next line of action, a source who attended Canberra meeting told The Express Tribune.

Exiting FATF grey list vital for IMF deal: Daban

Usually, the countries are grey-listed after completion of Mutual Evaluation. But due to political arm-twisting by the United States and India, the decision to grey-list Pakistan with effect from June 2018 was taken in February last year.

The 27-point Action Plan was based only on four Immediate Outcomes. Pakistan had faced problems in implementing the 27-point Action Plan. But the authorities believe that the new plan would be relatively easy as there were many technical nature issues that can be sorted out with the passage of time.

Pakistan cannot afford any adverse decision by the FATF in October, as its blacklisting may also derail the implementation of the $6 billion International Monetary Fund (IMF) programme.

The IMF's country head Teresa Daban had already warned about any adverse decision by the FATF, which she said could undermine critical private sector inflows.

The finance ministry handout stated that the Mutual Evaluation report did not cover the areas in which Government of Pakistan had made substantial progress since October 2018. It said that in the discussions, the Pakistan delegation welcomed engagement with the international community in its efforts to counter terrorism and money laundering.

The delegation briefed APG members on the steps taken in recent times for improving its AML/CFT framework as well as the actions for ensuring effective implementation of the FATF Action Plan.

The Pakistan delegation also held a number of bilateral meetings with key delegations to brief them on recent progress by Pakistan in implementing the FATF Action Plan.

During the meetings, Pakistan's Financial Monitoring Unit (FMU) also signed an MoU with the China Anti-Money Laundering Monitoring and Analysis Center (CAMLAC) on exchange of financial intelligence.