ISLAMABAD: Based on Pakis­tan’s ‘effective’ progress report, the Asia-Pacific Joint Group (APG) will submit next month its assessment of Islamabad’s progress on strengthening of its systems against money laundering and terror financing.

“The Pakistan delegation effectively presented Pakistan’s progress on each of the Financial Action Task Force (FATF) Action Plan items and provided additional information/clarification to the AP-Joint Group,” said a brief statement issued by the Ministry of Finance after two-day face-to-face meetings with the APG in Bangkok. It said the APG, as per the FATF’s procedures, would present its report in the FATF Plenary and Working Group meetings scheduled for October 13-18 in Paris, France.

The FATF plenary will conclude if Pakistan has sufficiently delivered on its 10-point action plan committed at the highest level in June 2018 to fight money laundering and terror financing in order to qualify exit from the grey list or be given some more time to make further progress.

A 15-member Pakistan delegation, led by Minister for Economic Affairs Division Mohammad Hammad Azhar, attended the two-day meetings with the APG to discuss progress on the FATF action plan. The delegation included representatives from the Federal Board of Revenue, State Bank of Pakistan, Securities and Exchange Commission of Pakistan, National Counter Terrorism Authority (Necta) and Federal Investigation Agency.

Assessment of Asia-Pacific Group to be placed before FATF meetings in Paris next month

Mr Azhar “conveyed government’s strong commitment to implement the international AML/CFT [anti-money laundering/counter finance terrorism] standards and reaffirmed Pakistan’s unequivocal commitment to work with international community in the fight against money laundering, terrorism financing and other financial crimes”, the statement said.

Informed sources said the delegation briefed the APG about the government’s action against proscribed organisations, particularly confiscation of their assets and blocking movement and activities of their workers and representatives. The face-to-face sessions also reviewed Pakistan’s overall performance against money laundering and terror financing and how Pakistan had tightened its network against illegal movement of currency.

Much of the discussions revolved around Pakistan’s responses to about 127 questions raised by the APG during one of the previous engagements. Islamabad had already shared its answers with the APG and the Bangkok session focused on further clarifications and explanations.

Some of the weak areas about which questions were raised included investments by proscribed organisations through individuals in the black market, including in real estate files and gold, and how the authorities could effectively monitor and control such transactions. Questions were also raised over insufficient coordination among the federal and provincial governments and their agencies over effective control of confiscated assets.

Pakistan is currently being monitored at three different but interlinked levels – the APG, the United States and the FATF – that would determine the country’s possible exit from the FATF grey list. Given significant progress on its 10 point action plan on 27 different standards, authorities expect to secure a couple of months of grace period to be fully compliant when it comes under final review of the FATF by mid-October.

Early last month, Prime Minister Imran Khan had set up a high-powered 12-member National FATF Coordination Committee, led by minister Azhar to ensure execution of all FATF tasks till December 1. Days later, Nacta declared two more outfits — Hizbul Ahrar and Balochistan Raaji Ajoi Sangar — as proscribed organisations under Section 11-B of the Anti-Terrorism Act, putting their members and activities under surveillance, expanding the list to a total of 73.

Following thaw in US-Pakistan relations in the wake of Afghan dialogue, the US has asked Pakistan to show tangible and satisfactory actions against banned organisations and their leaderships to pacify more countries towards supporting its case to move out of the FATF grey list.

Also last month, the APG on Money Laundering downgraded Pakistan to “enhanced follow-up” category over technical deficiencies to meet normal international financial standards by October. This means that the country would now be required to submit quarterly progress reports, instead of biannual, to the APG, starting February 1, 2020, to show improvements in its technical standards on the AML/CFT.

Authorities said Islamabad had made significant progress on FATF standards and action plans. They said the strengthening of AML/CFT laws was a significant development to merit removal from the grey list, but these had to be formally passed by the parliament and signed into law by the president. These were recently cleared by the National Assembly’s standing committee on finance and revenue.

With the support of the International Monetary Fund and the World Bank, Pakistan has engaged technical assistance providers as consultants in key institutions like the FBR, SECP, SBP and Financial Monitoring Unit to complete the action plan and further strengthen the effectiveness of the AML/CFT regime.

The amendments to foreign exchange regulation laws to restrict domestic movement of currency beyond a certain limit have also been cleared by the National Assembly’s standing committee to help relevant agencies curb the practice of Hawala/Hundi and other forms of illegal foreign exchange transactions act.

Published in Dawn, September 12th, 2019