After its meeting with representatives from Pakistan from February 17 to 22, the international Financial Action Task Force has advised Pakistan to keep working to curb money laundering and terror financing in order to be taken off the ‘grey list’.
“Since June 2018, when Pakistan made a high-level political commitment to work with the FATF and Asia Pacific Group (APG) to strengthen its anti money laundering/combating financing of terrorism (AML/CFT) regime and to address its strategic counter-terrorist financing-related deficiencies, Pakistan has taken steps towards improving its AML/CFT regime, including by operationalising the integrated database for its currency declaration regime,” reads a statement issued by the FATF on Friday.
It adds that Pakistan has revised its terror financing (TF) risk assessment; however, it does not demonstrate a proper understanding of the TF risks posed by Daish, Al Qaeda, Jamaatud Dawa, Falah-i-Insaniyat Foundation, Lashkar-e-Tayyaba, Jaish-e-Mohammad, the Haqqani Network and persons affiliated with the Taliban.
To qualify for a de-listing, the FATF has recommended, “Pakistan should continue to work on implementing its action plan to address its strategic deficiencies, including by:
- Adequately demonstrating its proper understanding of the TF risks posed by the terrorist groups above, and conducting supervision on a risk-sensitive basis.
- 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.
- Demonstrating that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS).
- Demonstrating that authorities are identifying cash couriers and enforcing controls on illicit movement of currency and understanding the risk of cash couriers being used for TF.
- Improving inter-agency coordination including between provincial and federal authorities on combating TF risks
- Demonstrating that law enforcement agencies are identifying and investigating the widest range of TF activity and that TF investigations and prosecutions target designated persons and entities, and persons and entities acting on behalf or at the direction of the designated persons or entities
- Demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions and enhancing the capacity and support for prosecutors and the judiciary
- 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
- Demonstrating enforcement against TFS violations including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases.
- Demonstrating that facilities and services owned or controlled by designated person are deprived of their resources and the usage of the resources. Given the limited progress on action plan items due in January 2019, the FATF urges Pakistan to swiftly complete its action plan, particularly those with timelines of May 2019.
Pakistan is among 83 countries with a risk score of 5.0 or above. These are countries that could be loosely classified as having a significant risk of money laundering and terrorist financing, according to the Basel AML Report 2018, an independent annual ranking that assesses the risk of money laundering and terrorist financing in 129 countries.
“Money laundering and terrorist financing continue to cripple economies, distort international finances and harm citizens around the globe,” says the report, which forms its global index based on the FATF’s country evaluation reports. It estimates that the amount of money laundered worldwide ranges from $500 billion to a staggering $1 trillion.
Pakistan has been on and off the grey list in the past. The last time we were removed from the grey list was in February 2015. If the ongoing consultations between the FATF and the Pakistani government are successful, we will be taken off the grey list and placed on the white list.