FATF keeps Pakistan on ‘grey list’

| FATF gives new six points action plan on anti-money laundering | Pakistan not in danger of falling in FATF blacklist: Hammad | International organisation says nations on ‘grey list’ are working with FATF to correct deficiencies | Haiti, Malta, Philippines, 

S. Sudan put on money laundering watch list

ISLAMABADParis    –   While keeping Pakistan on its grey list, the Financial Action Task Force (FATF) on Friday has given new six points action plan on anti-money laundering to Islamabad to address the strategic deficiencies.

The FATF has recognised Pakistan’s progress and efforts to address the Combating the Financing of Terrorism (CFT) action plan items.

FATF has noted that since February 2021, Pakistan 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 target terrorist assets.

“Pakistan has now 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 CFT-related item by demonstrating that TF investigations and prosecutions target senior leaders and commanders of UN designated terrorist groups,” it added. 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 has led to significant progress across a comprehensive CFT action plan.

In response to additional deficiencies later identified in Pakistan’s 2019 APG Mutual Evaluation Report (MER), Pakistan has made progress to address a number of the recommended actions in the MER and provided further high-level commitment in June 2021 to address these strategic deficiencies pursuant to a new action plan that primarily focuses on combating money laundering.

Pakistan should continue to work to address its strategically important AML/CFT deficiencies, namely by: (1) enhancing international cooperation by amending the MLA law; (2) demonstrating that assistance is being sought from foreign countries in implementing 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 DNFBPs are being monitored for compliance with proliferation financing requirements and that sanctions are being imposed for non-compliance.

Addressing a Press conference after the June 21-25 plenary meeting concluded in Paris, FATF President Dr Marcus Pleyer said that Pakistan remains under “increased monitoring”.

“Despite unprecedented progress”, Pakistan was still placed on the grey list, he said: “Our rules and procedures are very clear — all deficiencies must be addressed.”

On the recent events of uranium theft in India and whether FATF would take action, he said: “I am aware of the media reports, but I am not going to comment on something we haven’t assessed. The FATF assesses countries on AML frameworks and comments on the strength of their systems following an assessment.”

Speaking about mutual evaluations for India, he said there is a clear schedule for all the countries and due to COVID-19, the evaluations were delayed, but as soon as the COVID-19 situation improves, the mutual evaluation will be done for India.

Later, Federal Minister for Energy Hammad Azhar expressed hope that Pakistan would implement the new six point action plan within 12 months. “The FATF recognized considerable progress made by Pakistan on action plan and Pakistan’s high-level commitment. Pakistan has now completed 26 of the 27 Action Plan items,” he said while addressing a Press conference after FATF’s decision.

On Asia Pacific Group’s Mutual Evaluation Report (MER), Pakistan has been declared compliant or largely compliant on 31 recommendations out of 40 in order to combat money laundering and terror financing.

He further said that out of total of 82 deficiencies, Pakistan has made compliant on 75.

Hammad Azhar said that the previous action plan was based on counter-terror financing. He added that Pakistan has implemented 26 out of the 27 points, and said that the last point will be implemented as well.

“The previous action plan was for counter-terrorism and the new one is for anti-money laundering,” said Federal Minister, adding, that the anti-money laundering plan will be much easier to tackle than the counter-terrorism one.

He explained that Pakistan had implemented the most difficult FATF action plan and its efforts are being acknowledged the world over today.

“There is no threat of blacklisting; Pakistan will not be blacklisted, it will be whitelisted,” said the Minister.

Talking about FATF, the Minister said that the body was not like it was 10 years ago.

In the FATF, all member countries review one country together, and assured everyone that Pakistan is not in the same position as it was two years ago, he said.

“The importance of FATF has increased significantly in the current situation. [And] FATF wants better monitoring of money laundering,” said Azhar.

Meanwhile, the Ministry of Finance said FATF discussed Pakistan’s progress report on 2018 Action Plan and Post Observation Period Report (POPR) in its virtual Plenary.

Pakistani delegation under the lead of Federal Minister Muhammad Hammad Azhar attended this virtual FATF Plenary.

The Plenary discussion on Pakistan focused on three main areas; Pakistan’s Technical Compliance, ICRG Action Plan and Post Observation Period Report (POPR).

On Technical Compliance, FATF appreciated Pakistan’s commitment and efforts in seeking upgrades in a number of recommendations and expected that Pakistan would continue same momentum.

Regarding 2018 Action Plan, the FATF recognized considerable progress made by Pakistan on action plan and Pakistan’s high-level commitment. Pakistan has now completed 26 of the 27 Action Plan items.

The FATF, after discussion, decided to retain status quo for Pakistan i.e. countries in increased monitoring for 2018 TF Action Plan, for remaining one action plan item. Pakistan is confident that the remaining action item would be completed before FATF’s next Plenary scheduled in October 2021.

In relation to POPR, FATF acknowledged Pakistan’s significant progress and continuation of Pakistan’s high-level commitment.

A total of 82 deficiencies were highlighted in Pakistan’s 2019 MER which were included in the POPR as 67 recommended actions in 11 IOs, on which Pakistan reported progress. As a result of the progress made since the MER 2019, the FATF approved a 7 points ML centric action plan to be implemented by Pakistan. Pakistan has already provided its political commitment to FATF for implementation of the new Action Plan.

During FATF Plenary, there was a broader consensus on Pakistan’s continued efforts and progress on implementation of TF Action Plan as well as MER Recommended Actions.

There was a complete consensus among the membership regarding Pakistan’s unprecedented achievements in FATF.

Meanwhile, Haiti, Malta, Philippines and South Sudan were placed Friday on a “grey list” of countries under increased monitoring to counter money laundering and terrorist financing.

The Financial Action Task Force, an international organisation that coordinates global efforts to crack down on money laundering and terrorism financing, said nations on the “grey list” are working with it to correct deficiencies in their financial systems.

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