The global money laundering and terrorist financing watchdog FATF has retained Pakistan on its terrorism financing ‘grey list’. Pakistan will have to address at the earliest the remaining deficiencies in its financial system, according to a media report on Saturday.
Pakistan has been on this grey list of Paris-based Financial Action Task Force (FATF) since June 2018 for failing to check money laundering, leading towards terror funding, and was given a plan of action by October 2019. The country continues be listed due to its failure comply with FATFs mandates from last year’s meeting that it would undergo compliance measures before 2020 if not already done so instead.
The plenary decided against removing Pakistani from the category but noted that Islamabad had completed 32 out of 34 actions points in their battle against terrorism finance crimes earlier today after successfully completing 26 out 27 items set forth previously by FATFs guidelines.
The plenary noted that since June 2018, when Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its anti-money laundering/combating the financing of terrorism (AML/CFT) regime and address strategic deficiencies related to combating terrorist finance, progress had been significant.
The FATF encouraged Pakistan to continue making progress in order for it do so as soon as possible; one item remained outstanding -that terror financing investigations and prosecutions target senior leaders and commanders of UN designated terrorist groups.
In response additional deficiencies identified by APG’s Mutual Evaluation Report in 2021, Islamabad provided a new action plan primarily focusing on money laundering.
In June of 2021, Pakistan has taken swift steps in improving its AML/CFT regime and completed six out of the seven action items ahead of any relevant deadlines expiring. It demonstrated that it was enhancing the impact by nominating individuals and entities for UN designation, confiscating proceeds from crime based on its risk profile.Officials said Pakistan now aimed to fully comply with their anti-money laundering plan by December 31st 2023 – two years after the initial deadline for completion set forth in January 2020.
The country had an additional 34 points outlined as part of this second concurrent action plan which are either complete or underway to curb money laundering and terror financing activities from occurring within society at large.
The FATF (Financial Action Task Force) has encouraged Pakistan to continue making progress in order to address, as soon as possible and for the last time, the remaining item: proving that terror financing investigations and prosecutions target senior leaders of UN-designated terrorist groups. In response to additional deficiencies later identified during Pakistan’s 2019 APG Mutual Evaluation Report, they provided a new commitment at high levels with an action plan primarily focused on combating money laundering. Since June 2021, they have taken swift steps towards improving their AML/CFT regime by completing six of seven items ahead of any deadlines expiring including demonstrating how sanctions are impacting them by nominating individuals or entities for UN designation
Pakistan, in line with the FATF’s risk profile, should continue to work towards implementing measures that will combat money laundering and terrorist financing. Officials have said it is aiming to fully comply with the 2021 anti-money laundering plan by 2023. Within Pakistan itself there are two concurrent action plans up until 2021 on anti-money laundering and combating terror financing; 30 of these 34 points currently have been either addressed or fully met.
The most recent action plan for 2020 focused largely on addressing money laundering while also including provisions against terrorism financing amongst other things like international cooperation in enforcement as well as AML/CFT supervision systems which were studied thoroughly by Pakistan under IMF guidelines (another structural benchmark).
The IMF recently asked Pakistan to finish the last item in the 2018 AML/CFT action plan, which concerned the effectiveness of terror financing investigations and prosecutions of senior leaders of UN-designated terrorist groups, and to address the deficiencies identified in the APG’s Mutual Evaluation Report under the 2021 action plan as soon as possible.With the support of close friends such as China, Turkey, and Malaysia, Pakistan has managed to escape being placed on the blacklist thus far.The FATF is an intergovernmental organisation that was founded in 1989 to combat money laundering, terrorism financing, and other risks to the international financial system’s integrity.The European Commission and the Gulf Cooperation Council are two regional organisations that are members of the FATF. India is a participant in the FATF consultations.