Pakistan all but exits grey list

ISLAMABAD:

A global dirty money watchdog on Friday announced that Pakistan had substantially completed its two action plans, covering 34 items, as part of a bid to get off the grey list on which it has been since 2018 – a decision that would end the threat of Islamabad being put on the black list.

The Financial Action Task Force (FATF), while kicking off the process to remove Pakistan from the grey list, said an on-site visit was warranted to verify that reforms had begun and were being sustained, as well as that the necessary political commitment remained in place to sustain improvement in the future.

The announcement was welcomed by Minister of State for Foreign Affairs Hina Rabbani Khar, who was representing Pakistan at the plenary in Germany. “With this, the exiting process from the grey list starts as per the FATF procedure.”

“At its June 2022 Plenary, the FATF made the initial determination that Pakistan has substantially completed its two action plans, covering 34 items,” according to a statement issued by the FATF.

“On-site inspection mission decision was taken by the global body during its June 14-17 plenary meeting held in Berlin, Germany,” the FATF meeting said.

It added the initial determination “warrants an on-site visit to verify that the implementation of Pakistan’s AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation and improvement in the future”.

 “The FATF will continue to monitor the Covid situation and conduct an on-site visit at the earliest possible date,” it added, without giving a date for the visit.

The Pakistani authorities said that the global body will send a mission to Pakistan next month to determine the veracity of the government’s claim that it has fully implemented all the 34 conditions that the FATF had set in February 2018 and then in June 2021. Pakistan had been asked to implement the conditions in 15 months but it took around four years due to complexity of the issues.

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The FATF’s decision will now require commitments from all the Pakistani stakeholders to prove to the FATF upcoming mission that no serious deficiency remains in its Anti-Money Laundering (AML) and Combating Terror Financing (CFT) regimes.

The FATF handout noted that since June 2018, Pakistan made a high-level political commitment to work with the FATF and Asia Pacific Group to strengthen its AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies.

The FATF said that Pakistan’s continued political commitment to combating both terror financing and money laundering has led to significant progress.

In particular, Pakistan demonstrated that terror financing investigations and prosecutions target senior leaders and commanders of UN designated terrorist groups and that there is a positive upwards trend in the number of money laundering investigations and prosecutions being pursued in Pakistan, in line with Pakistan’s risk profile.

In addition, Pakistan also largely addressed its 2021 action plan ahead of the set times, according to the FATF.

The Pakistani authorities said that Pakistan will submit its progress report in the first week of July to the FATF. The FATF team will then make on-site visits to Pakistan in the last week of July and hold meetings with the relevant government departments, according to Pakistani officials.

The on-site inspection team will submit its report to the FATF and on the basis of on-site team report, the FATF will announce the decision of keeping or removing Pakistan from the grey list in the next plenary.

Also read Pakistan pins hopes on ‘onsite visit’ to exit FATF 'grey list'

In February 2018, the FATF had decided to place Pakistan on the grey list with effect from June 2018 and handed it over a list of 27 conditions that it needed to implement to exit the grey list.

In the last plenary meeting, the FATF also acknowledged the “significant progress” made by Pakistan in completing the required action items.

Earlier, Pakistan had completed 26 of the 27 action items in its 2018 action plan and one remaining point was about the CFT-related item by demonstrating that terror financing investigations and prosecutions target senior leaders and commanders of the UN-designated terrorist groups.

The remaining action item was the most significant among all in the view of the member countries, including the US and India, which have circled Pakistan through the FATF platform.

Countries have long been demanding through the FATF forum that Pakistan should 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.

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 the strategic deficiencies pursuant to a new action plan that primarily focused on combating money laundering.

The FATF had given a new six-point action plan in June last year, keeping Islamabad exposed to global pressure tactics.

In response to additional deficiencies later identified in Pakistan’s 2019 APG Mutual Evaluation Report (MER), Pakistan has made progress to address a number of the recommended actions in the MER and provided further high-level commitment in June 2021 to address these strategic deficiencies pursuant to a new action plan.

Pakistan was asked to continue to work to address its strategically important AML/CFT deficiencies by enhancing international cooperation by amending the Mutual Legal Assistance law and that it was seeking assistance from foreign countries in implementing UNSCR 1373 designations; demonstrate that supervisors were conducting both on-site and off-site supervision commensurate with specific risks associated with designated non-financial businesses and persons (DNFBPs), including applying appropriate sanctions where necessary.

"Pakistan is not being removed from the grey list today. The country will be removed from the list if it successfully passes the onsite visit," FATF president Marcus Pleyer told a news conference.

The purpose of the onsite visit, he said, is to verify the completion of reforms to check whether it is sustainable and irreversible. Pleyer did not give a date for the visit but said it would be before the body's October plenary, where an "informed decision" can be made whether to delist Pakistan.

(With additional input from Agencies)