FATF challenge still persists

The Financial Action Task Force (FATF) has given Pakistan another four months to meet the remaining 13 out of a total of 27 actions to address 'strategic deficiencies' relating to counter money laundering, terrorist financing and proliferation financing. The government's spin is to focus on the positive aspects of the FATF statement particularly with reference to the acknowledgement that "to-date Pakistan has largely addressed 14 out of the 27 action items, with varying levels of progress made on the rest of the action plan." And further to claim victory given that India was actively lobbying to place Pakistan on the black list, which would have led to FATF advising all other jurisdictions to curtail if not sever business relations and transactions with Pakistan - a fact which would negate all efforts of the government to undertake painful reforms under the ongoing International Monetary Fund (IMF) programme. Additionally, it must be borne in mind that implementation of the FATF action plan is a component of the IMF programme as the two institutions work together on this subject.

The FATF's take on Pakistan is markedly different and while its website notes 17 other countries with strategic deficiencies under increased monitoring, defined as those actively working with FATF to address these deficiencies, yet disturbingly Pakistan was not only allocated two instead of one paragraph but was also the only country where as per the FATF, "all deadlines in the action plan have expired." The threat therefore remains implicit as stated in the last paragraph "should significant and sustainable progress especially in persecuting and penalizing TF not be made by the next plenary, the FATF will take action, which could include FATF calling on its members and urging all jurisdictions to advise their FIS to give special attention to business relations and transactions with Pakistan."

FATF maintains that Pakistan must continue to work on implementing its strategic deficiencies which include: (1) demonstrating that remedial actions and sanctions are applied in cases of AML/CFT violations, relating to TF risk management and TFS obligations; (2) demonstrating that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS); (3) demonstrating the implementation of cross-border currency and BNI controls at all ports of entry, including applying effective, proportionate and dissuasive sanctions; (4) demonstrating that law enforcement agencies (LEAs) are identifying and investigating the widest range of TF activity and that TF investigations and prosecutions target designated persons and entities, and those acting on behalf or at the direction of the designated persons or entities; (5) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions; (6) demonstrating effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all 1,267 and 1,373 designated terrorists and those acting for or on their behalf, including preventing the raising and moving of funds, identifying and freezing assets (movable and immovable), and prohibiting access to funds and financial services; (7) demonstrating enforcement against TFS violations including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases; (8) demonstrating that facilities and services owned or controlled by designated person are deprived of their resources and the usage of the resources.

The to-do list is indeed exhaustive and while one can appreciate the achievements by the government and understand the government's spin on the matter yet the decision-makers are not the Pakistani public but those outside the country who are carefully monitoring the entire situation. Additionally, the government's prosecution branch is particularly weak which is amply reflected by the failure of the investigating agencies to establish very serious charges made against members of the opposition that would lead to a conviction, which one would assume is in the government's interest.