Avoids blacklisting, remains in grey: Pakistan gets 123 days FATF breather

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ISLAMABAD: The Financial Action Task Force (FATF) has kept Pakistan in the Grey List for an extended period up to February 2020 and warned that Islamabad would be put on the blacklist if it did not comply with the remaining 22 out of 27 points.

Top official sources told The News on Friday that during the FATF plenary meeting held at Paris from October 13 to 18 Pakistan managed to escape falling into the blacklist despite hectic efforts by New Delhi due to the diplomatic support secured by Islamabad from China, Turkey, Malaysia, GCC and Saudi Arabia.

Although, Pakistan had asked for extension up to June 2020, the FATF allowed relaxation up to February 2020 for fully complying with all the conditions. This shows that Islamabad possesses only 45 to 60 days to implement the remaining 22 points of action plan, as the FATF found Islamabad compliant on only five points out of a total of 27.

The Joint Working Group (JWG) of the FATF had declared Pakistan as largely compliant on 10 points but the FATF plenary meeting accepted Islamabad’s compliance only on five points out of 27 action plans.

However, on the issue of Mutual Evaluation of the Asia Pacific Group (APG), the FATF decided that there would be no new action plan for 12 months as Pakistan hadcomplained that it could not pursue two action plans simultaneously.

“We will have to implement all the remaining 22 points by January 2020 and the report will have to be submitted by end December 2019. So, the time is limited and the wish list is long,” an official commented in background discussions.

The FATF in its statement issued from its headquarters stated that since June 2018 when Pakistan made a high-level political commitment to work with the it and APG to strengthen its AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies, Pakistan had made progress towards improving its AML/CFT regime, including the recent development of its ML/TF risk assessment.

At the October 2019 plenary, Pakistan reiterated its political commitment to completing its action plan and implementing AML/CFT reforms.

The FATF states that Pakistan should continue to work on implementing its action plan to address its strategic deficiencies, including, (1) adequately demonstrating its proper understanding of the TF risks posed by the terrorist groups, and conducting supervision on a risk-sensitive basis; (2) demonstrating that remedial actions and sanctions are applied in cases of AML/CFT violations, and that these actions have an effect on AML/CFT compliance by financial institutions; (3) demonstrating that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS); (4) demonstrating that authorities are identifying cash couriers and enforcing controls on illicit movement of currency; (5) improving inter-agency coordination including between provincial and federal authorities on combating TF risks; (6) demonstrating that law enforcement agencies (LEAs) are identifying and investigating the widest range of TF activity and that TF investigations and prosecutions target designated persons and entities, and those acting on behalf or at the direction of the designated persons or entities; (7) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions and enhancing the capacity and support for prosecutors and the judiciary; and (8) demonstrating effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all 1267 and 1373 designated terrorists and those acting for or on their behalf, including preventing the raising and moving of funds, identifying and freezing assets (movable and immovable), and prohibiting access to funds and financial services; (9) demonstrating enforcement against TFS violations including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases; and (10) demonstrating that facilities and services owned or controlled by designated person are deprived of their resources and the usage of the resources.

According to the FATF, all deadlines in the action plan have now expired. While noting recent improvements, the FATF again expressed serious concern over the overall lack of progress by Pakistan to address its TF risks, including remaining deficiencies in demonstrating a sufficient understanding of its transnational TF risks, and more broadly, Pakistan’s failure to complete its action plan in line with the agreed timelines and in light of the TF risks emanating from the jurisdiction.

To date, Pakistan has only largely addressed five of 27 action items, with varying levels of progress made on the rest of the action plan. The FATF strongly urges Pakistan to swiftly complete its full action plan by February 2020. Otherwise, should significant and sustainable progress not be made across the full range of its action plan by the next plenary, the FATF will take action, which could include the FATF calling on its members and urging all jurisdictions to advise their FIs to give special attention to business relations and transactions with Pakistan.

Pakistan’s Ministry of Finance Friday said the FATF plenary meeting was held in Paris from 13-18 October 2019. The Pakistani delegation was led by Mr. Muhammad Hammad Azhar, Minister for Economic Affairs Division.

The FATF meeting considered Pakistan’s progress report on the FATF Action Plan and Pakistan’s APG Mutual Evaluation report (MER). Pakistan’s delegation reaffirmed its political commitment to fully implement the Action Plan. The plenary meeting decided to maintain status quo on the FATF Action Plan and allow the usual 12 months observation period for the APG MER.

The delegation also held sidelines meetings with various delegations and briefed them about the progress made by Pakistan on the FATF Action Plan and steps taken for strengthening its AML/CFT framework.

A session on technical assistance and training needs of Pakistan was also organised in collaboration with UNODC and APG Secretariat, which was attended by a number of interested countries and multilateral agencies including China, USA, UK, Canada, Japan, EU, World Bank, IMF, ADB, and UNODC.

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