Pakistan not yet off the FATF hook

Anti-money laundering watchdog rules out possibility of blacklisting country


Shahbaz Rana October 21, 2021
FATF president during the press briefing. SCREENGRAB

ISLAMABAD:

The Financial Action Task Force (FATF) on Thursday unanimously decided to keep Pakistan on its grey list, but ruled out the possibility of blacklisting the country as it had implemented the majority of the conditions.

The FATF -- the global body working to combat financing of terrorism and money laundering -- said Islamabad still did not meet the “strategically important” condition about nominating entities and individuals, who should be put on the UN list of terror outfits and persons.

FATF President Marcus Pleyer announced the decision at the conclusion of the watchdog’s three-day plenary meeting.

“Pakistan had to complete two concurrent action plans with a total of 34 items and it has now addressed or largely addressed 30 of the items,” said Pleyer.

He added that of the 27 action points agreed under the June 2018 plan, 26 had been implemented -- a position that remained unchanged since then.

Overall, Pakistan is making “good progress” on the June 2021 new action plan.

“Four out of the seven action plan items are now addressed or largely addressed.”

However, the remaining condition of the June 2018 plan is the most crucial one, which Pakistani sources said was also the reason to keep country on the FATF watch list.

The FATF announcement read: “Pakistan should continue to work to address its other strategically important AML/CFT [anti-money laundering and terrorist financing] deficiencies, namely by providing evidence that it actively seeks to enhance the impact of sanctions beyond its jurisdiction by nominating additional individuals and entities for designation at the UN.”

Read More: Pakistan is test case for FATF’s fairness: law minister

It added that Islamabad should demonstrate an increase in money laundering investigations and prosecutions and that proceeds of crime continue to be restrained and confiscated in line with the country’s risk profile, including working with foreign counterparts to trace, freeze, and confiscate assets.

Western nations and India have long been pressuring Pakistan through the FATF forum to target eight groups -- the Afghan Taliban, Jamaat-ud-Dawa (JuD), Haqqani Network, Jaish-e-Mohammed (JeM), Lashkar-e-Taiba (LeT), Falah-e-Insaniyat Foundation, al-Qaeda and Islamic State.

Interestingly, some of these entities and their leaders are now part of the interim Afghan government. That makes it impossible for Pakistan to move against them.

Pakistan was placed on the FATF grey list with effect from June 2018 and was asked to implement a 27-point action plan to exit it.

To a question about an Indian minister’s claim that the Prime Minister Narendra Modi-government had ensured that Pakistan remained on the grey list, Pleyer said the FATF was a technical body and it made decisions by consensus.

“The decision to retain Pakistan under increased monitoring is also taken with consensus.”

To another question by an Indian journalist, Pleyer said there was no discussion to blacklist Pakistan, as the government was cooperating with the FATF and had already completed 30 of the 34 action points.

The FATF stated that since June 2018 when Pakistan made a political commitment to work with the global body and the APG [Asia/Pacific Group] to strengthen its AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies, the country had made “significant progress” across a comprehensive action plan.

“While Pakistan has reported some steps, the FATF encourages [it] to continue to make progress to address as soon as possible the one remaining CFT-related item by continuing to demonstrate that TF [terror financing] investigations and prosecutions target senior leaders and commanders of UN designated terrorist groups.”

In response to additional deficiencies later identified in Pakistan’s 2019 APG Mutual Evaluation Report (MER), in June 2021, Pakistan provided further high-level commitment to address these strategic deficiencies pursuant to a new action plan that primarily focuses on combating money laundering, it added.

The global watchdog said since June 2021, Pakistan had taken swift steps towards improving its AML/CFT regime, including by enacting legislative amendments to enhance its international cooperation framework; demonstrating DNFBP [designated non-financial businesses and professions] monitoring for PF-TFS [terrorist financing and financing of proliferation] and supervision commensurate with the risks; and applying sanctions for noncompliance with beneficial ownership requirements.

In response, the finance ministry said the FATF had recognised “considerable progress” made by Pakistan on both the action plans.

It added that progress on the remaining three action items was well under way and the country aimed to complete them ahead of timelines set by the FATF.

The ministry said that the remaining action items in the 2021 action plan included investigation and prosecution of money laundering cases, confiscation of assets and UN listings.

“We submitted a comprehensive progress report on the last remaining action plan item agreed under the June 2018 plan.”

The ministry added that the FATF would undertake the next review of Pakistan’s progress in February 2022.

“Pakistan is fully committed to completing both its action plans in cooperation with the FATF and its international partners.”

Separately, President Arif Alvi gave a one-year extension to Khawaja Adnan Zahir, who was appointed FATF Cell director general two years ago.

Zahir had retired from government service but was reemployed in the FATF cell. His new one-year term begins on Friday (today).

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