• FATF acknowledges Islamabad making good progress
• Calls upon govt to prosecute top cadres of terror groups
• Ministry says progress on remaining three items to be completed before timelines

ISLAMABAD: While acknowledging ‘good progress’, the Financial Action Task Force (FATF) on Thursday retained Pakistan on its ‘increased monitoring list’ — the so-called grey list — and called upon the government to exhibit terror financing investigation against and prosecution of top cadres of the UN-designated terror groups.

“Pakistan remains under increased monitoring list,” said Marcus Pleyer, president of the Paris-based global money laundering (ML) and terrorist financing (TF) watchdog, at a virtual news conference after FATF’s hybrid plenary.

He said Pakistan had two concurrent action plans with a total 34 action points of which 30 had either been fully or largely addressed to curb money laundering and terror financing. He said the most recent action plan of 2021 on money laundering from FATF’s regional affiliate Asia Pacific Group (APG) had largely focused on money laundering and had found serious deficiencies.

“Overall, Pakistan is making good progress on this new action plan (2021). Four out of the seven items are now addressed or largely addressed,” he said. On the other hand, Pakistan has addressed or largely addressed 26 out of 27 action items from 2018 FATF action plan.

Mr Pleyer said: “The FATF encourages Pakistan to continue to make progress to address as soon as possible the one remaining CFT-related (combating the financing of terrorism) item by continuing to demonstrate that TF investigations and prosecutions target senior leaders and commanders of UN-designated terrorist groups.”

In response to additional deficiencies later identified in the 2019 APG Mutual Evaluation Report (MER) in June 2021, Pakistan provided further high-level commitment to addressing these strategic deficiencies pursuant to a new action plan that primarily focuses on combating money laundering.

The FATF president noted that since June 2021, “Pakistan has taken swift steps towards improving its AML/CFT regime, including by enacting legislative amendments to enhance its international cooperation framework, demonstrating DNFBP (Designated Non-Financial Business and Professions) monitoring for PF TFS (Proliferation Financing and Targeted Financial Sanctions) and DNFBP supervision commensurate with the risks and applying sanctions for noncompliance with beneficial ownership requirements”.

“Pakistan should continue to work to address its other strategically important AML/CFT deficiencies, namely by: (1) providing evidence that it actively seeks to enhance the impact of sanctions beyond its jurisdiction by nominating additional individuals and entities for designation at the UN; and (2) 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,” the FATF urged.

Mr Pleyer strongly rejected questions about possible blacklisting of Pakistan for continuous deficiencies, saying the government had demonstrated continued strong commitment to cooperate with global community and had completed 30 out of 34 action points. “This shows the clear commitment of the Pakistani government so there is no discussion on blacklisting Pakistan,” he said, adding that the FATF urged the authorities to address the remaining four items as early as possible.

The FATF noted that 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 address its strategic counterterror financing-related deficiencies, the country’s continued political commitment had led to significant progress across a comprehensive CFT action plan.

Pakistan’s reaction

Commenting on the outcome, the finance ministry said: “FATF has recognised considerable progress made by Pakistan on both the action plans.” It said Pakistan completed four of the seven 2021 action plan items much before the timelines prescribed by the FATF.

In a statement, the ministry said progress on the remaining three action items was well under way and targeted to be completed ahead of the timelines.

The action items that have been completed include amendments to the Mutual Legal Assistance Act 2020, AML/CFT supervision of DNFBPs, transparency of beneficial ownership information and implementation of Targeted Financial Sanctions for Proliferation Finance by DNFBPs. The remaining items in 2021 action plan include investigation and prosecution of ML cases, confiscation of assets and UN listings.

“Considerable work has already been carried out on the remaining items of both action plans,” the statement said, adding that the FATF would undertake the next review of Pakistan’s progress in February 2022. It said Pakistan stood fully committed to completing its both action plans in cooperation with the FATF and its international partners.

Responding to questions about certain claims by Indian ministers that their country had kept Pakistan in the grey list, the FATF president declined to comment on the statement but said it had no political considerations and as a professional body of 39 jurisdictions, it took decisions by consensus.

Mr Pleyer said three countries — Jordan, Mali and Turkey — had been added to the increased monitoring list and all had agreed to action plans. He said an assessment had been carried out on Turkey in 2019 which outlined serious issues regarding money laundering and terror financing. “Turkey has made progress in some areas, but issues remain,” he said, adding that the country needed to show that it was effectively addressing the issue of money laundering and terror financing.

Published in Dawn, October 22nd, 2021