• ‘Grey list is a political question’

ISLAMABAD: Pakistan is putting the finishing touches to its action plan with proposed measures for combating money laundering and terror financing with the Paris-based Financial Action Task Force (FATF) to chart its way forward once it is placed on the grey list by the global watchdog in June.

A compliance report has been submitted by the government to the Asia-Pacific Group (APG) — a sub-group within FATF — detailing the steps taken thus far and those that will be taken in the future to bring Pakistan’s financial, regulatory and legal landscape into compliance with the watchdog’s requirements.

On Friday, a meeting was convened at the Foreign Office to review the proposed actions which are to be discussed with APG joint working group in Bangkok next week. This was the last in a series of meetings taking place within the government as officials race to meet the June deadline by when Pakistan will be placed on the FATF grey list.

A senior official in the finance ministry told Dawn that a delegation from Pakistan would depart within the next few days for consultations with the APG’s Joint Working Group in Bangkok. That meeting will discuss the steps proposed by Pakistan to be taken after June to exit the grey list. The report has been drawn up by the Financial Monitoring Unit, a department housed in the State Bank of Pakistan, according to sources with knowledge of the matter.

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The FATF earlier sent an email to the SBP highlighting its concerns over the amnesty scheme introduced by the government in its last budget. The email points out that Pakistan is required to inform FATF before announcing any such scheme. To address their concerns, Pakistan included a provision to specify that ‘proceeds of crime are not eligible’ for the amnesty scheme.

The senior official confirmed to Dawn that the placement of Pakistan on the grey list was set to commence in June. He said the action plan drawn up by the government would set conditions for Pakistan to meet in a period of one year. None of those working on the matter and contacted by Dawn were willing to discuss the details of the action plan. “Whatever conditions are being finalised, we will implement it administratively,” one source said.

The details of action plan remained under negotiation with the FATF and set to be finalised by next month, the official said.

Pakistan had been removed from the FATF grey list in February 2015 due to improved measures to combat twin menaces of money laundering and terror financing. The key point at that time was the passage of the Anti-Money Laundering Act, 2010 into law.

‘Grey list is a political question’

When approached to seek comment on the issue, Finance Minister Miftah Ismail told Dawn that his government had already taken several administrative steps complying with global standards to counter money laundering and terror financing.

He said Pakistan’s law to counter money laundering and terror financing was the most effective and strong legislation in the region. He said Pakistan would take all administrative measures as suggested and agreed under the proposed action plan.

However, the minister said it would be up to the FATF to remove Pakistan from the grey list or not. “It will be a political question,” he said.

“Since then, we have held several meetings to review progress achieved on all those areas listed by FATF,” an official source privy to these development told Dawn. While the financial monitoring unit had so far generated more than 300 reports, no terror-related link was established in any of these reports, the source added.

Under the reports, the only irregularity identified was the element of tax evasion. The investigations into the cases has also stopped owing to a court decision that struck down of the SRO that gave investigative powers to the intelligence and investigation department of Inland Revenue for anti-money laundering inquiries.

The proposed action plan will also include capacity building of law enforcing agencies to pursue such cases. The FATF wants increased enforcement against all proscribed organisations and individuals including all those organisations operating under new names, vigilance of non-profit organisations and enhancing capacity of the law enforcing agencies.

Published in Dawn, May 19th, 2018