ISLAMABAD: The Fina­n­cial Action Task Force is set to give Pakistan another four months (until June 2020) to achieve full compliance with its 27-point action plan and secure exit from the FATF grey list.

Informed sources told Dawn from Paris that Pakistan’s progressive performance vis-à-vis the action plan had been appreciated at the working group meetings, but all the members, barring a couple of friendly nations, called for “full compliance” with the action plan. “We are satisfied with the progress so far. There was no case at all for blacklisting us,” a source said.

The FATF will issue a formal statement on Friday (today) on conclusion of the group meetings and plenary from Feb 16 to 21. There would be no presser this time, the source said. The Pakistani delegation was led by Revenue Minister Hammad Azhar.

The sources said Pakistan was found fully or close to fully compliant on more than half of the 27 targets.

The FATF has advised Pakistan to continue to work on implementing its action plan to address its strategic deficiencies with 100 per cent compliance by June 2020 and or else it will be put on the blacklist.

Global watchdog to issue formal statement today

Pakistan has been given an eight-point action plan, asking it to (1) demonstrate that remedial actions and sanctions are applied in cases of AML/CFT (anti-money laundering/combating the financing of terrorism) violations relating to terrorist financing (TF) risk management and TF standard obligations, (2) demonstrate that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services, (3) demonstrate the implementation of cross-border currency and BNI controls at all ports of entry, including applying effective, proportionate and dissuasive sanctions, (4) demonstrate 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) demonstrate that TF prosecutions result in effective, proportionate and dissuasive sanctions, (6) demonstrate 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) demonstrate enforcement against TF standard violations, including administrative and criminal penalties, and provincial and federal authorities cooperating on enforcement cases, and (8) demonstrate that facilities and services owned or controlled by designated persons are deprived of their resources and the usage of the resources.

To swiftly comply with remaining benchmarks, two back-to-back meetings were already held at the Federal Board of Revenue (FBR), the National Counter Terrorism Authority (Nacta) and the Ministry of Interior on Wednesday and Thursday, and an implementation strategy was shared with the Pakistani delegation in Paris.

The sources said the meetings at the Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP) have been called for the coming week to speed up implementation on the remaining items under the existing action plan.

The FATF plenary had formally placed Pakistan on the grey list in June 2018 due to ‘strategic deficiencies’ in its AML/CFT regime after a push from India supported by the United States, the United Kingdom and some European countries. Pakistan had then committed at the highest level to the 27-point action plan but failed to meet deadlines.

Pakistan is already finalising major amendments to at least a dozen of its laws to meet the FATF requirements by June this year. Targets have been set for further legislation to upgrade about 12-13 laws and subordinate legislation to complete the overall legal framework in line with the FATF standards.

On the basis of this legal framework, Pakistan’s performance would be judged in the next FATF plenary in October 2020.

Some of these new laws include the Anti-Terrorism Act that is already pending with parliament and the Mutual Legal Assistance Act for exchange of legal cooperation with various countries.

The United Nations (Security Council) Act of 1948 will be fully adopted by Pakistan in its updated form under which the punishment for terrorist entities and individuals proscribed by the UNSC will be 10-year rigorous imprisonment and fine will be increased to Rs200 million from Rs1m.

The Criminal Procedure Code would also be amended to meet the international standards. Also, the Companies Act, 1984 would be amended to provide enabling provisions for compliance with the FATF standards. Besides, a number of subordinate laws would be upgraded to enable the SECP and other federal and provincial agencies to cover the activities of their respective areas.

These laws would provide enabling legal framework to bring all unregulated sectors of the economy under a proper regulatory framework to in line with the FATF standards. The FBR would be legally empowered to be a regulator for the real estate sector, gems and jewellery, diamonds, precious stones, etc.

Likewise, the Ministry of Law and the Pakistan Bar Council would be legally empowered to play the role of regulator for lawyers, legal advisers and law firms. Similarly, chartered accountants, cost and management accountants, financial consultants and all those relating to accounts groups will come under the regulatory domain of the SECP.

Published in Dawn, February 21st, 2020