The Financial Action Task Force (FATF) has given Pakistan a four-month extension with a strong push to undertake swift actions to fulfil the entire action plan by February 2020. Until then, Islamabad will remain on the FATF’s grey list.
In the five-day FATF week, held in Paris, the intergovernmental organization reviewed the actions taken and progress achieved by nearly 15 countries, including Pakistan, in their efforts to combat money laundering and terror financing. The session was attended by representatives from 206 countries across the globe.
— Waseem Abbasi (@Wabbasi007) October 18, 2019
The five-day session came to an end on Friday. The Minister for Economic Affairs, Hammad Azhar, spearheaded the Pakistani delegation. As the session drew to an end, three countries, Zimbabwe, Mongolia and Iceland, were added to the grey list, while Sri Lanka, Ethiopia and Tunisia made it out of the list after fulfilling the FATF recommendations.
Pakistan: 4-Month Extension
In the case of Pakistan, the global terror financing watchdog has issued a stern report of Islamabad’s “overall lack of progress” in addressing terror financing risks.
The statement issued by the FATF stated, “While noting recent improvements, the FATF again expresses serious concerns with the overall lack of progress by Pakistan to address its TF risks, including remaining deficiencies in demonstrating a sufficient understanding of Pakistan’s 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.”
“Pakistan needs to do more and it needs to do it faster. Pakistan’s failure to fulfil FATF’s global standards is an issue that we take very seriously,” FATF President Xiangmin Liu said while addressing a news conference in Paris.https://t.co/78ou8KbA28
— The Express Tribune (@etribune) October 19, 2019
It further added, “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.”
The FATF has warned of action against Pakistan if significant and sustainable progress is not achieved before the next plenary, scheduled for February 2020. The action would include the intergovernmental organization calling upon its members and jurisdictions to “advise their financial institutions to give special attention to business relations and transactions with Pakistan.”
Since June 2018, Pakistan has made several high-level political commitments to working alongside the FATF and its regional affiliate, the Asia Pacific Group (APG) to strengthen its actions against money laundering and terror financing. Islamabad has made progress towards adopting a strategic counterterrorism financing plan and has made great strides in improving its anti-money laundering and counter-financing terrorism regimes.
Islamabad Committed to Action Plan
Shortly after the FATF announcement, the Finance Ministry, on Friday, reiterated Islamabad’s commitment to efficiently implement the FATF action plan. The Finance Ministry claimed that the FATF session proceeded to maintain the status quo on the FATF action plan, and provide the typical 12-month observation period for the APG MER.
The Pakistani delegation also met with other delegations on the sidelines of the plenary meeting and briefed them on Pakistan’s progress and measures to implement the FATF action plan. During the FATF week, Pakistan reinstated its political will to fulfil its action plan and undertake wide-ranging anti-money laundering and counter financing terrorism reforms.
FATF has noted progress already achieved by Pakistan during the last one year and especially in the last 4 months. However, more work needs to be done as our action plan is perhaps the most ambitous and challenging ever handed out to any country. 1/2
— Hammad Azhar (@Hammad_Azhar) October 18, 2019
During the concluding session, the FATF reminded Islamabad of its commitments and urged the country to continue working towards eliminating its strategic insufficiencies by exhibiting a strong understanding of the terror-financing risks posed by terrorist organizations.
Islamabad has demonstrated a track record of undertaking remedial measures and imposing sanctions to curb money laundering and terror financing, while competent authorities are undertaking measures to identify and act against illegal money or value transfer services.
The Minister for Economic Affairs Hammad Azhar, who led the Pakistani delegation, observed that Pakistan needs to undertake further measures to fulfil the “ambitious” action plan put forward by the FATF.
Hammad Azhar said, “FATF has noted progress already achieved by Pakistan during the last one year and especially in the last 4 months. However, more work needs to be done as our action plan is perhaps the most ambitious and challenging ever handed out to any country.”
The Minister for Economic Affairs added, “Pakistan has targeted to complete all items on its FATF action plan and Insh’Allah upgrades from the grey list to the white list of FATF in 2020.”
He concluded, “A coordinated effort from all Regulators, LEAs, Federal and Provincial Govt Depts is already underway in this regards.”
Pakistan has targeted to complete all items on its FATF action plan and InshAllah upgrade from the grey list to the white list of FATF in 2020.
A coordinated effort from all Regulators, LEAs, Federal and Provincial Govt Depts is already underway in this regards.
— Hammad Azhar (@Hammad_Azhar) October 18, 2019
Reports reveal that the authorities are taking measures to curb the illicit movement of currency by implementing strict controls and improving coordination between different federal and provincial authorities to eliminate the risks of terror financing. The Law enforcement agencies have launched a wide-ranging activity to identify and prosecute proscribed individuals and organizations involved in terror financing.
Countries that fail to take effective measures to curb terror financing and money laundering are placed on the grey list of the global watchdog. Being placed on the grey list is a warning for a country that it is likely to be placed on the blacklist if it fails to take effective measures to contain terror financing and money laundering. Both, the grey list and blacklist come with a wide range of economic downfalls, while the blacklist is most dreaded due to economic sanctions that can cripple the economy.
Pakistan made it to the FATF grey list in 2012 but managed to extract itself out of the allegations of terror financing by 2015. On June 29, 2018, Pakistan, once again, found itself on the grey list. The FATF had given Islamabad 15 months to implement a 27-point action plan, with a stern warning of being added to the blacklist if it fails to comply.