ISLAMABAD: Acting on fears of imposition of sanctions by the United Nations next year for failing to comply with standards of the Financial Action Task Force (FATF) on curbing money laundering and terrorist financing, Pakistan is lobbying to seek international support to ward off the threat, say sources in the Ministry of Law.
Besides, initiatives are also being taken to improve the country’s laws pertaining to money laundering and terrorism financing.
The government must make amendments to the Anti Terrorism Act 2012 by February next year to step up its ability to fight money laundering and terrorist financing and strictly monitor the flow of funds. In case of failure, the UN will slap sanctions on the country. Iran and North Korea are the case in point.
However, the government has told its international friends that such a development will impede the flow of foreign direct investment into the country and affect its financial sector.
FATF, an international anti-money laundering watchdog, in its plenary meeting in Paris in February this year singled out Pakistan for failing to effectively legislate against terrorism financing in accordance with international standards prescribed under the United Nations Security Council (UNSC) resolution.
FATF, created under the UNSC in the immediate aftermath of 9/11, believed that either laws on counter-terrorism financing and anti-money laundering do not exist or are ineffective in Pakistan. It reiterated this position in the following plenary session in Italy in June.
In its reports, FATF has called on the governments, including Pakistan, to consider tax evasion as a money-laundering offence. The agency is also enlarging its scope to target proliferation of weapons of mass destruction.
Pakistan was referred to the International Co-operative Review Group (ICRG) for inadequate and unconsolidated implementation of anti-money laundering and counter-terrorism financing standards in 2007.
In its efforts to win international support, the Pakistan government has told friendly countries that FATF is heavily dominated by “western countries” along with India. “Member countries also have political motives.” China is the only country in the group, which has spoken in favour of Pakistan.
The government also insists that it is implementing international standards embodied in 40 comprehensive recommendations of FATF on fighting money laundering and terrorist financing.
Simultaneously, the government is also working on improving current legislation on counter-terrorism financing. Work on new legislation has already been approved by the cabinet and will soon be presented before parliament for approval.
“Pakistan is determined to comprehensively strengthen its anti-money laundering and counter-terrorism financing regime and has taken action to implement FATF recommendations. The international community must acknowledge our progress on these fronts and support Pakistan in FATF so that the blacklisting label could be removed,” the source said, while explaining Pakistan’s diplomatic campaign to win international support against FATF’s moves.
Pakistan has reiterated that it is a party to the Additional Protocol to Saarc Convention on Suppression of Terrorism, which primarily deals with financing of terrorism. It has also enacted Anti-Money laundering Act 2010.
The State Bank of Pakistan (SBP) has also taken measures to check possible financing of terrorist activities and has so far frozen 128 bank accounts and seized over Rs750 million. A Financial Monitoring Unit has been established under the Money Laundering Act to monitor suspicious financial transactions.
Published in The Express Tribune, October 30th, 2012.