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FATF seeks details of action against banned outfit members: officials

Also inquires Pakistan about legal measures pertaining to seminaries

SAMAA | - Posted: Dec 21, 2019 | Last Updated: 1 year ago
Posted: Dec 21, 2019 | Last Updated: 1 year ago
FATF seeks details of action against banned outfit members: officials

The Financial Action Task Force has sought details of Pakistan’s action against members of banned outfits and legal measures against seminaries, officials of the Ministry of Finance said Saturday.

The FATF — an inter-governmental body that combats money laundering, terrorist financing and threats to the international financial system — termed the December 3 report submitted by Pakistan “generally positive”, according to the officials.

It appreciated Pakistan’s measures regarding implementation of currency smuggling, identification and investigation of terror-financing activity, and effective implementation of sanctions against the assets of 1267 and 1373 designated/proscribed persons and entities.

However, the global watchdog asked 150 questions in its questionnaire sent to Pakistani officials. It also sought details of the country’s plan to counter money laundering risks linked with investment in national saving schemes.

SAMAA TV tried reaching Minister for Economic Affairs Hammad Azhar for a comment on the development. However, Azhar declined to comment on the subject.

The minister had led the Pakistani delegation in talks with FATF officials in October.

Pakistan would submit its response to the questionnaire by January 8, the officials said further. Pakistani officials would hold a meeting with FATF representatives from January 21 to 23.

On October 18, the FATF decided to keep Pakistan on its grey list until February 2020.

The decision was taken at the end of the FATF meeting held in Paris from October 13 to October 18. Pakistan had been given till February 2020 to fully implement the FATF’s 27-point action plan.

A Pakistani delegation led by Azhar had presented its compliance report during the meeting.

“Despite a high level commitment by Pakistan to fix these weaknesses, Pakistan has not made enough progress,” Xiangmin Liu, president of the FATF, said in Paris.

“If by February 2020 the country has not made significant progress, we will consider further actions which potentially could include placing the country… on the blacklist,” he said.

Only two countries, North Korea and Iran, are on the FATF blacklist, which severely crimps their access to the global financial system as well as international aid.

The FATF, in its statement, had said that the country had made major progress on only five of the 27 action items, with varying levels of progress made on the rest of the action plan.

Pakistan urged to swiftly implement 10 crucial points

Pakistan has been urged to swiftly implement 10 crucial points of the FATF action plan. The points are listed below:

  • Adequately demonstrate its proper understanding of the TF risks posed by the terrorist groups, and conducting supervision on a risk-sensitive basis
  • Demonstrate 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
  • Demonstrate that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS)
  • Demonstrate that authorities are identifying cash couriers and enforcing controls on illicit movement of currency
  • Improve inter-agency coordination, including between provincial and federal authorities, on combating TF risks
  • Demonstrate 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
  • Demonstrate that TF prosecutions result in effective, proportionate and dissuasive sanctions and enhancing the capacity and support for prosecutors and the judiciary
  • Demonstrate 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
  • Demonstrate enforcement against TFS violations including administrative and criminal penalties and provincial and federal authorities cooperate on enforcement cases
  • Demonstrate that facilities and services owned or controlled by designated persons are deprived of their resources and the usage of the resources

Earlier, Pakistan had failed to meet the January and May deadlines set by the FATF for implementing its action plan.

The FATF had put Pakistan on its grey list in June 2017 because of deficiencies in the country’s Anti-Money Laundering and Countering of Terrorist Financing regulations.

Being on the grey list doesn’t come with any sanctions, but if we remain on this list, we face the risk of being put on the black list. This is where it gets problematic.

Being on the black list means our 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 our 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 we are placed on the black list.

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