FATF to announce future course of action on Pakistan today

The Financial Action Task Force (FATF) will announce its future course of action on Pakistan's action plan today (Friday) at the conclusion of its five-day virtual meeting in Paris that started on June 21.

The FATF plenary will consider the report of Asia-Pacific Group (APG) on Pakistan. The APG, in its Mutual Evaluation Report (MER) on Pakistan released just weeks ago, had moved the country from enhanced (expedited) to enhanced follow-up list.

The second follow-up MER on Pakistan uploaded by the AGP group on its website stated that overall, Pakistan has made notable progress in addressing the technical compliance deficiencies identified in its MER. Pakistan has been re-rated on 22 recommendations, and has been downgraded as non-compliant from partially compliant in one recommendation.

After adoption of MER, Pakistan was placed under Post Observation Period by the FATF, which expired in February 2021.

During the said period, Pakistan carried out major legal reforms with the enactment of 14 federal laws and three provincial laws along with relevant rules and regulations.

Pakistan submitted its report to the FATF on its Technical Compliance on October 1, 2020.

Money laundering: Pakistan moved to enhanced follow-up list by APG

On Wednesday, Foreign Minister Shah Mahmood Qureshi issued a statement, saying: “We were given 27 action items, out of which work on 26 has been completed while vigorous work has also been done on the 27th point.

“If the purpose is to hang a sword on Pakistan that’s another point. Otherwise, there is no justification to keep Pakistan in the grey list,” Qureshi said.

At the conclusion of its plenary in February this year, FATF President Dr Marcus Pleyer said Pakistan should continue to work on implementing the three remaining items in its action plan to address its strategically important deficiencies, namely by: (1) demonstrating that TF [terror financing] investigations and prosecutions target persons and entities acting on behalf or at the direction of the designated persons or entities: (2) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions: and (3) demonstrating effective implementation of targeted financial sanctions against all 1,267 and 1,373 designated terrorists, specifically those acting for or on their behalf.

Pakistan not out of the FATF woods yet

Timeline of FATF and Pakistan

In June 2018, FATF placed Pakistan on its list of “jurisdictions under increased monitoring” or Grey List citing structural deficiencies, which, according to FATF, resulted in Pakistan’s failure to effectively combat terror financing and money laundering.

In February 2020, FATF expressed concerns over “Pakistan’s failure to complete its action plan in line with the agreed timelines and in light of the terrorist financing risks emanating from the jurisdiction.” Following this development, the global terror financing watchdog along with International Cooperation Review Group (ICRG) issued a 27-point Action Plan for Pakistan to address these structural deficiencies.

In October last year, FATF noted that Pakistan fully met the targets laid down in 21 of the 27 items of the Action Plan and asked the country to achieve full progress on the Action Plan by February 2021.

In February this year, FATF decided to keep Pakistan on its ‘grey list’, giving it four more months – June 20, 2021 – to complete its full action plan. It noted that Pakistan has made progress across all action plan items and it has now largely addressed 24 out of 27 items of the action plan.