Caretaker Finance Minister Dr Shamshad Akhtar was successful in presenting Pakistan's case to the Financial Action Task Force (FATF) and the country was kept on grey list instead of being downgraded to the black list as had been feared since the last FATF meeting earlier this year. The black list implies non-compliant high-risk countries. As per FATF website, Iran and DPRK were regarded as high-risk countries requiring action while monitored jurisdictions included Ethiopia, Iraq, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, Vanuatu and Yemen.
FATF is an inter-governmental organisation created in 1989 according to its website 'on the initiative of the G7 countries to develop policies to combat money laundering'. After 9/11 terror attack on the United States, FATF expanded its mandate to include terror financing. A total of 40 recommendations were developed through peer review of member countries which include (i) implementing relevant international conventions; (ii) criminalizing money laundering and enabling the law enforcement agencies in member countries to confiscate the proceeds of money laundering; (iii) implementing customer due diligence, record-keeping of suspicious transactions requiring requirements for financial institutions and designated non-financial businesses and professions; (iv) establishing a financial intelligence unit to receive and disseminate suspicious transaction reports; and (v) cooperating internationally in investigating and prosecuting money laundering.
From 2012 to 2015, Pakistan was on the list of countries with "strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan." No FATF statement was issued on Pakistan in 2016 or 2017 but reports indicate that Pakistan remains on the grey list though subsequent to the June 2018 FATF meeting, Pakistan has not yet been mentioned in any statement released by the FATF.
Pakistan's compliance with respect to legislation conforms to FATF requirements, however, implementation remains weak prompting the Caretaker Finance Minister to submit a 26-point action plan to be delivered by January next year, not yet released to the public. However, reports indicate that this plan of action envisages dealing with funding of militant groups including Hafiz Saeed-led Jamaat-ud-Dawa (JuD). One would also assume that Dr Shamshad Akhtar may have also addressed any FATF queries regarding the ongoing Tax Amnesty Scheme. It had raised concerns within the FATF countries in early April when it was announced. The then Special Advisor to the Prime Minister on Finance later promoted to Finance Minister, Miftah Ismail, had claimed at the time that he would respond to all FATF concerns though it is unclear whether he did and if so whether he succeeded in allaying their concerns. The range and scale of misreporting of economic-related matters was so significant during the tenure of the PML-N government that one would require independent confirmation for all sensitive matters, sensitive for political as well as economic reasons.
For the sake of clarity, it is important to recognize the implications for countries that are placed on the so-called FATF 'Black List'. At present, there are two countries on the FATF Black List and face extremely tough sanctions as a consequence. The economic plight is driving them to compromise on their nuclear programmes. It is therefore essential that whatever is lacking in our implementation of the anti-terror and anti-money laundering laws/protocols we accord it the highest priority to overcome this infirmity in our implementation and become fully compliant.
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