Pakistani officials informed on Wednesday the Financial Action Task Force about the progress made with regard to the implementation of its action plan to strengthen the country’s anti-money laundering and combating the financing of terrorism framework.
A 15-member Pakistani delegation, headed by Minister for Economic Affairs Division Hammad Azhar, is holding talks with the FATF’s Asia-Pacific Joint Group in Bangkok. The negotiations between the two sides will continue until September 13.
“The Pakistan delegation effectively presented Pakistan’s progress on each of the FATF action plan items and provided additional information/clarification to the AP-Joint Group,” the Ministry of Finance said in a statement.
During the talks on Wednesday, Azhar conveyed his government’s strong commitment to implement the international AML and CFT standards. He reaffirmed Pakistan’s unequivocal commitment to work with the international community in the fight against money laundering, terrorism financing and other financial crimes.
Speaking to reporters in Bangkok, the minister said Pakistan achieved all targets set by the FATF in the last four to five months. He said the technical evaluation team was briefed in detail on steps taken by Pakistan to implement the FATF action plan.
“The negotiations were better than the past. The [FATF] team will prepare its report on the basis of the same briefing,” Azhar said.
During the ongoing talks, Pakistani officials will also respond to FATF’s queries about restricting activities and freezing the assets of proscribed organisations and groups.
On Monday, Pakistani officials submitted a report on strengthening of the country’s anti-money laundering and combating the financing of terrorism framework.
The FATF will make a final decision on whether to exclude Pakistan from its grey list, keep it or place it on the black list at a meeting in Paris on October 16-18.
Earlier on August 22, the FATF’s Asia Pacific Group had adopted Pakistan’s third mutual evaluation report, which identified a number of areas where further action was required to strengthen anti-money laundering and combating the financing of terrorism framework.
The APG adopted the report during its 22nd annual meeting in Canberra from August 18 to 23. A high-level Pakistani delegation, headed by State Bank of Pakistan Governor Dr Reza Baqir, attended the meeting.
During the discussions, Pakistani officials welcomed engagement with the international community in its efforts to counter terror financing and money laundering.
The delegates briefed the APG on the steps taken in recent times for improving Pakistan AML&CFT framework, as well as the actions for ensuring effective implementation of the FATF action plan.
In June, the FATF had given Pakistan four months (till October) to improve its counter-terror financing operations in accordance with the agreed plan.
In a statement on its website, the FATF had expressed concern that “not only did Pakistan fail to complete its action plan items by January deadline; it also failed to complete its action plan items due in May, 2019”.
“The FATF strongly urges Pakistan to swiftly complete its action plan by October, 2019 when the last set of action plan items are set to expire,” the FATF statement said. “Otherwise, the FATF will decide the next step at that time for insufficient progress.”
Pakistan was told to block financial loopholes, terror financing and money laundering by implementing the 27-point action plan.
Based out of Paris, the FATF is an inter-governmental body that combats money laundering, terrorist financing and threats to the international financial system. It put Pakistan on its grey list in June 2017 because of deficiencies in the country’s anti-money laundering and countering of terror financing regulations.
Being on the grey list doesn’t come with any sanctions. However, if Pakistan remains on this list, it faces the risk of being put on the black list. This is where it gets problematic.
Being on the black list means its banking system will be regarded as one with poor controls over AML and CFT standards — forget bringing PayPal to Pakistan, expatriates will find it difficult to send remittances and traders’ cost of business will increase because local banks will face higher scrutiny in international payments and foreign banks might not even do business with Pakistani banks.
The government, too, will struggle to raise funds from international markets if the country is placed on the black list.