APG places Pakistan on enhanced monitoring list for at least one year

Top Pakistani official dismisses Indian media reports that Pakistan was placed on blacklist by APG

ISLAMABAD: The Asia Pacific Group on Money Laundering has placed Pakistan on its enhanced monitoring list after Islamabad's performance was found unsatisfactory on three-fourth of the Financial Action Task Force's (FATF) recommendations.

In its Mutual Evaluation Report, the FATF style regional body observed that the effectiveness of Pakistan's Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) regimes were of low level.

The APG prepared the Mutual Evaluation Report after two visits to Pakistan during which they exchanged at least four technical annexures with Islamabad - the body provided government ample opportunities to improve the situation.

Pakistan's Financial Monitoring Unit (FMU) played an effective role as coordinating agency to highlight areas for improvement on which authorities were required-to focus and address the issues.

Islamabad now has six months to show progress as the first enhanced monitoring report will be submitted in February next year to APG. APG findings will be presented in the FATF Plenary. Pakistan's "enhanced monitoring", on the other hand, begins immediately.

Enhanced Expedited Follow up List

Under the list, Pakistan would be required to submit report to APG on February 1, 2020. The report will show improvements in the technical compliance, a top Pakistani official who attended the APG meetings confirmed to The Express Tribune.

The official dismissed Indian media reports that Pakistan was blacklisted by the APG.

"Media reports being circulated about Pakistan being blacklisted by APG are incorrect and baseless", stated Ministry of Finance in a brief statement on Friday, which will follow a detailed press release.

Pakistan is now required to submit its performance report to the APG twice a year.

The sources said that out of 40 universal recommendations of Financial Action Task Force (FATF), Pakistan's rating was partially and non-compliant on 30 recommendations and performance was also below par on 10 as against 11 Immediate Outcomes.

Out of total 11 Immediate Outcomes -which determine the effectiveness of the AML and CFT frameworks, only on one indicator was effectiveness was found moderately effective and on rest of 10, the rating was ineffective.

On Wednesday, APG on Money Laundering adopted Pakistan's Mutual Evaluation Report (MER) during a meeting held in Canberra, Australia.  "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.

But the Ministry of Finance officials believed that Pakistan has addressed some of the weaknesses during the past 10 months that will be reflected in February 2020's report. It was Pakistan's second Mutual Evaluation in the past five years and third in the past ten years. Yet many of the sectors and areas that were found non-compliant remained unaddressed during the past ten years.

The sources said that Pakistan had anticipated the adverse outcomes of the APG and prepared an internal action plan of around 150 points. The country wanted to implement the plan in two years but it seems that the task has to be completed in one year.

In case it fails to improve the situation even after falling in the Enhanced Expedited Follow Up list, the chances of an adverse decision by FATF will multiply.

A handout issued by the APG after the meeting noted that during the week, APG members adopted six significant mutual evaluation reports. The reports - for China, Chinese Taipei, Hong Kong, China, Pakistan, the Philippines, and the Solomon Islands - were analysed and discussed in detail over two full days and will now be subject to post-plenary quality and consistency review prior to publication.  Final publication on the APG website is expected in early October 2019.

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 FATF Plenary will be held in October where the implementation on an ongoing 27-point Action Plan and adverse APG findings will be reviewed.