FATF to conduct on-site visit in Pakistan at 'earliest possible date' after 'significant progress'

The Financial Action Task Force (FATF) will conduct an on-site visit of Pakistan at the earliest possible date, announced the body's president Dr Marcus Pleyer on Friday, as it acknowledged the "significant progress" the country has made in strengthening its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime.

According to the FATF, an on-site visit is conducted to confirm that the implementation of the necessary legal, regulatory, and/or operational reforms is underway and there is the necessary political commitment and institutional capacity to sustain implementation.

If the on-site visit has a positive outcome, the FATF will decide on removing the jurisdiction from public identification at the next FATF plenary.

"Since June 2018, when Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies, Pakistan’s continued political commitment to combating both terrorist financing and money laundering has led to significant progress," it said in a statement.

The FATF will continue to monitor the COVID-19 situation and conduct an on-site visit at the earliest possible date: FATF statement on Pakistan

"In particular, Pakistan demonstrated that terror-financing investigations and prosecutions target senior leaders and commanders of UN designated terrorist groups and that there is a positive upward trend in the number of ML investigations and prosecutions being pursued in Pakistan, in line with Pakistan’s risk profile. In addition, Pakistan also largely addressed its 2021 action plan ahead of the set times.

"At its June 2022 Plenary, the FATF made the initial determination that Pakistan has substantially completed its two action plans, covering 34 items, and warrants an on-site visit to verify that the implementation of Pakistan’s AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation and improvement in the future.

"The FATF will continue to monitor the COVID-19 situation and conduct an on-site visit at the earliest possible date."

It will be a longer on-site visit due to the two separate action plans. However, I can tell you that this will definitely be (complete) before October's plenary: FATF President Dr Marcus Pleyer

During the press conference, Dr Pleyer said an on-site visit is normal after the action plan is largely complete.

"The purpose of the on-site visit is to check whether all the items on the action plan are met in a sustainable fashion and implemented fully," said Dr Pleyer in response to a question.

"It will be a longer on-site visit due to the two separate action plans. However, I can tell you that this will definitely be (complete) before October's plenary."

Dr Pleyer's statement implies that Pakistan could come off the 'grey-list' pending outcome of the on-site visit.

Earlier, reports started making the rounds that Pakistan has been removed from the FATF's increased monitoring list. However, Business Recorder reported that the FATF has categorically stated that all announcements pertaining to the outcome of its plenary meeting will be made at the press conference.

Minister of State for Foreign Affairs Hina Rabbani Khar, who is also the chair of Pakistan’s National FATF Coordination Committee and leading the country's delegation in Berlin, tweeted that FATF plenary meetings are continuing.

"FATF will issue a public statement after conclusion of the meetings tonight," said Khar. "Prejudging the outcome or speculative reporting could and should be avoided."

She added that the government has arranged a media briefing at the Ministry of Foreign Affairs on Saturday morning on this issue.

Meanwhile, Khar, talking with DW Hotspot Asia on the sidelines of the meeting in Berlin, stated that no nation wants to be in the grey-list because it has its challenges and repercussions.

“It takes away investor confidence and puts a country into a work-under-process bracket,” she said. “We don’t want to be in the grey list and we will continue to remain engaged intensively with international regulatory systems."

How to be removed from FATF's increased monitoring list

In order to be removed from FATF monitoring, a jurisdiction must address all or nearly all the components of its action plan.

Once the FATF has determined that a jurisdiction has done so, it will organise an on-site visit to confirm that the implementation of the necessary legal, regulatory, and/or operational reforms is underway and there is the necessary political commitment and institutional capacity to sustain implementation.

If the on-site visit has a positive outcome, the FATF will decide on removing the jurisdiction from public identification at the next FATF plenary. The concerned jurisdiction will then continue to work within the FATF or the relevant FATF-style regional bodies (FSRB), through its normal follow-up process, to improve its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime.

Pakistan's situation

At its last plenary in March, the FATF had announced that Pakistan would continue to stay on the grey-list.

It had noted at the time that "since June 2018, when Pakistan made a high-level political commitment to work with the FATF and Asia/Pacific Group (APG) to strengthen its AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies, Pakistan’s continued political commitment has led to significant progress across a comprehensive CFT action plan

"Pakistan has completed 26 of the 27 action items in its 2018 action plan. The FATF encourages Pakistan to continue to make progress to address, as soon as possible, the one remaining item by continuing to demonstrate that terror financing investigations and prosecutions target senior leaders and commanders of UN designated terrorist groups."

Pakistan was placed on FATF's grey list for deficiencies in its counter-terror financing and anti-money laundering regimes in June 2018.

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