FATF retains Pakistan on grey list

International financial watchdog observes Pakistan has completed 26 of 27 action items in its 2018 action plan

KARACHI:

The Financial Action Task Force (FATF) announced on Friday it retained Pakistan on its grey watch list though the global financial watchdog noted Islamabad’s “persistent political commitment” to implement its action plan.

The announcement came after the conclusion of the sixth plenary of the FATF held under the German Presidency of Dr Marcus Pleyer. At the end of the four-day of meetings, the watchdog also announced that it had added the United Arab Emirates to its “grey” watch list.

The FATF acknowledged the "significant progress" made by Pakistan in completing the required action items. “Since June 2018, when Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its AML/ CFT regime and to address its strategic counter-terrorist financing-related deficiencies, Pakistan’s continued political commitment has led to significant progress across a comprehensive CFT action plan,” it the statement said. “Pakistan has completed 26 of the 27 action items in its 2018 action plan.”

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The FATF encouraged Pakistan to continue to make progress to address, as soon as possible, the one remaining item by continuing to demonstrate that terrorist 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 focused on combating money laundering, it added.

Since June 2021, Pakistan had taken swift steps towards improving its AML/CFT regime and completed six of the seven action items ahead of any relevant deadlines expiring, including by demonstrating that it was enhancing the impact of sanctions by nominating individuals and entities for UN designation and restraining and confiscating proceeds of crime in line with Pakistan’s risk profile, the FATF said.

It motivated Pakistan to continue working to address the one remaining item in its 2021 action plan by demonstrating a positive and sustained trend of pursuing complex money laundering investigations and prosecutions.

UAE added to grey list

This time around, the watchdog added the UAE to the grey list as well. “Following review, the FATF now also identifies the United Arab Emirates [in the grey list],” the statement said, adding that in February 2022, the UAE made a high-level political commitment to work with the FATF and MENAFATF to strengthen the effectiveness of its AML/CFT regime.

“Since the adoption of its MER in February 2020, the UAE has made significant progress across its MER’s recommended actions to improve its system, including by finalising a TF Risk Assessment, creating an AML/CFT coordination committee, establishing an effective system to implement targeted financial sanctions without delay, and significantly improving its ability to confiscate criminal proceeds and engage in international cooperation,” the FATF statement said. “Additionally, the UAE addressed or largely addressed more than half of the key recommended actions from the MER.”

Among other things, the FATF stated that UAE would work to implement its action plan by demonstrating a sustained increase in outbound MLA requests through case studies and statistics to help facilitate investigation of TF, ML, and high-risk predicates.

According to the statement, the UAE would also identify and maintain a shared understanding of the ML/TF risks between the different DNFBP sectors and institutions.