Anti-money laundering action plan now one more requirement: Pakistan remains on FATF grey list

ISLAMABAD: The Financial Action Task Force (FATF) has announced to retain Pakistan on its “grey list” and given it a new action plan of six items to effectively implement its standards across numbers of areas with regards to anti-money laundering and combating financing terrorism (AML/CFT).

Speaking at a virtual press conference from Paris after the FATF plenary meeting from June 21-25on Friday, the FATF President, Marcus Pleyer, said the Pakistan government has made substantial progress in making its counter-terrorism financing system stronger and more effective, while largely addressing 26 out of 27 items of the action plan.

However, one action item of the action plan of investigation and prosecution of senior leaders and commanders of the UN designated terror groups remains unaddressed, Pleyer added.

He said that Pakistan has also been given a new action plan with six items including;(1) enhancing international cooperation by amending the MLA law; (2) demonstrating that assistance is being sought from foreign countries in implementing the UNSCR 1373 designations; (3) demonstrating that supervisors are conducting both on-site and off-site supervision commensurate with specific risks associated with DNFBPs, including applying appropriate sanctions where necessary; (4) demonstrating that proportionate and dissuasive sanctions are applied consistently to all legal persons and legal arrangements for non-compliance with beneficial ownership requirements; (5) demonstrating an increase in ML investigations and prosecutions and that proceeds of crime continue to be restrained and confiscated in line with Pakistan’s risk profile, including working with foreign counterparts to trace, freeze, and confiscate assets; and (6) demonstrating that the DNFBPs are being monitored for compliance with proliferation financing requirements and that sanctions are being imposed for non-compliance.

Pleyer said that the FATF would closely cooperate and observe the progress and in four months’ time, adding that delisting will not occur before both action plans are completed and two on-site assessments have been granted and successfully completed to show that the improvements are sustainable before the FATF members decide on delisting.

To a question about the remaining one action item of the action plan, Pleyer said that this remains to be seen “as Pakistan knows what is expected from them”.

He added that there is remaining action item on one action plan that is concentrating on combating terrorism financing.

Additionally, he said that there is a new action plan with the remaining deficiencies and actions Pakistan must complete.

He added that since June 2018, when Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) regime and to address counter-terrorist financing-related deficiencies, Pakistan’s continued political commitment has led to a significant progress across a comprehensive CFT action plan.

The FATF recognises Pakistan’s progress and efforts to address these CFT action plan items, and notes that since February 2021, the country has made progress to complete two of the three remaining action items on demonstrating that effective, proportionate and dissuasive sanctions are imposed for TF convictions and that Pakistan’s targeted financial sanctions regime was being used effectively to targeted terrorist assets.

Pakistan has now completed 26 of the 27 action items in its 2018 action plan.

However, one key action plan is still to be completed, which is related to the investigation and prosecution of senior leaders and commanders of UN-designated terrorists group.

In addition to this, a separate process is taking place over the past few years that in 2019, the FATF regional partners APG identified during the assessment a number of serious issues in relation to entire anti-money laundering and counter financing terrorism.

Since then Pakistan has made improvement which include key efforts to raise awareness in private sector on money laundering risks and to develop and use financial intelligence to build cases.

However, Pakistan is still failing to effectively implement FATF standard across numbers of areas, this means risks of money laundering remain high, which in turn can fuel corruption and organised crimes, he added.

That is why the FATF has worked with the Pakistani government to improve the areas that still need to be improved as part of the new action plan that actually focuses on money laundering.

This includes increasing the number of investigations and prosecutions, and making sure that law enforcement agencies cooperate internationally to trace, freeze, and confiscate assets, he added.

He maintained that this is about helping authorities stop corruption and prevent organised criminals profiting from their crimes and undermining the financial system and legitimate economy in Pakistan.

He continued that he wanted to thank the Pakistani government for their continuing strong commitment to this process.

Pakistan has already made substantial progress since the APG report first identified issues and stated that authorities would make the necessary changes.

To a question that despite unprecedented progress, Pakistan after completing 26 out of 27 actions plan still remains on grey list since 2018, which would be a kind of discouragement for other countries who want to strengthen their financial systems, Pleyer stated that the FATF rules and procedures are “very clear” that all the deficiencies must be addressed and it would be also be discouraging if other countries fully address all their action plan items and then got off, while other countries got off the list before they had completed all the action plan items.

So the expectation is clear that all the countries are treated equally, so many have achieved and this is our expectation from Pakistan, he added.

When asked if Pakistan is scrutinized for terror financing what kind of action plan is for India to stop it from nuclear proliferation as well as on Indian mutual evaluation pending because of Covid-19, Pleyer said he was aware of media reports about nuclear proliferation but was not going to comment on something that the FATF has not assessed.

He further stated that mutual evaluation would be rescheduled for India as soon as Covid-19 situation becomes clear to start the process for this South Asian country, he added.

To a question about delisting Pakistan after addressing the single remaining item on the original action plan or additional items added by the Asia Pacific Group would also need to be addressed, the president of the FATF said that as soon as this last remaining item of the [original] action plan is largely addressed, the members will decide whether they will grant an onsite for this action plan.

“Usually once an onsite has been successfully completed, the membership can decide on delisting a country,” he added.

“But in this [Pakistan’s] case, we have a parallel action plan with all the action items in the second action plan. Then Pakistan must also largely complete all the items on this action plan and then there will be a separate onsite to decide on this action plan. So the delisting will not occur before both action plans are completed and two onsites have been granted and successfully completed and have shown that the improvements are sustainable before the FATF members decide on delisting,” Pleyer said.

Copyright Business Recorder, 2021