• Watchdog acknowledges Islamabad’s completion of both action plans, covering 34 items
• Plans on-site visit to verify implementation of measures
• ISPR terms step ‘a monumental effort paving way for whitelisting’
• Task force moves to limit Russian influence; removes Malta but adds Gibraltar to grey list

ISLAMABAD: Global dirty money watchdog FATF kept Pakistan on its “grey list” of countries under increased monitoring on Friday but acknowledged that the country had substantially completed its two action plans, covering 34 items.

The Paris-based Financial Action Task Force (FATF) will now make an on-site visit to verify Pakistan’s progress in tackling terrorism financing before deciding whether to delist the country.

“Pakistan is not being removed from the grey list today. The country will be removed from the list if it successfully passes the on-site visit,” FATF president Marcus Pleyer told a news conference after the conclusion of a four-day plenary session in Berlin, Germany.

Responding to a question, Mr Pleyer declined to give exact dates for the on-site visit but said the verification process would definitely be completed well before FATF’s plenary in October for a final outcome.

He said the on-site visit would be a relatively long one because of two simultaneous action plans of the FATF (of 2018) and its regional affiliate Asia-Pacific Group (of 2021).

The FATF, set up by the G7 group of advanced economies to protect the global financial system, placed Pakistan on its grey list of countries with inadequate controls over terrorism financing in June 2018, which made foreign firms more cautious about investing in Pakistan.

Therefore, observers say that exiting the list has the potential to directly impact foreign inflows in the country, specifically foreign portfolio investment and foreign direct investment.

Earlier, the country remained on the grey list from February 2008 to June 2010 and then from February 2012 to February 2015.

‘A great achievement’

Soon after the development, Minister of State for Foreign Affairs Hina Rabbani Khar congratulated the country, saying the international community had “unanimously” acknowledged the country’s efforts.

“Our success is the result of four years of a challenging journey. Pakistan reaffirms resolve to continue the momentum and give our economy a boost,” she said.

In a video message, Ms Khar said “now our process of exiting the grey list as per the FATF procedure starts, according to which a technical evaluation team will be sent to Pakistan”.

“It’s our full effort that this team completes its work before October’s plenary cycle and we have told them that we will ensure their comfort and ease,” she said, adding that the process would end in October.

Prime Minister Shehbaz Sharif also felicitated the nation and welcomed the FATF’s announcement. “Praise be to Allah, return of Pakistan to the white list is a big success of Pakistan,” he said in a statement. He congratulated the government institutions, personalities and relevant team and said their joint efforts brought fruit.

“I pay tribute to the whole team working for the success of Pakistan,” he said. “More such good news will be destiny of Pakistan in future.” The premier hoped that the return of Pakistan to the whitelist would help improve the country’s economic and financial situation.

ISPR, the military's media wing also noted that completing the FATF’s action plans “is a great achievement” and “a monumental effort paving way for whitelisting”.

“Core cell at GHQ which steered the national effort and civil-military team which synergised implementation of action plan made it possible, making Pakistan proud,” the ISPR tweet quoted Chief of the Army Staff Gen Qamar Javed Bajwa as saying.

Minister for Poverty Alleviation and Social Safety Shazia Marri also praised the development as “good news”.

She said Pakistan had covered a lot of ground in confronting money laundering and countering terror financing through implementing the action plans. “The engagement with FATF has led to the development of a strong AML/CFT framework in Pakistan and resulted in improving of our systems to cope with future challenges,” she said.

Earlier on Friday, several politicians, mostly from the PTI, and journalists posted on social media today that the FATF had removed Pakistan from the grey list. However, at the time, Ms Khar, who was leading Pakistan’s delegation in Berlin, cautioned that prejudging the outcome and speculative reporting should be avoided.

She pointed out that the plenary meetings were still ongoing and the FATF would issue a statement on Friday night after their conclusion.

She added that a press conference would be held at the foreign ministry on Saturday (today) in this regard.

Information Minister Marriyum Aurangzeb also called for an end to speculations about the plenary session’s outcomes, terming them inappropriate.

‘Continued political commitment’

The FATF president praised Pakistan particularly for demonstrating that terrorism financing investigations and prosecutions target senior leaders and commanders of UN-designated terrorist groups. Besides, there was a positive upwards trend in the number of money laundering investigations and prosecutions being pursued in Pakistan, in line with the country’s risk profile.

“In addition, Pakistan also largely addressed its 2021 action plan ahead of the set times,” he said.

Also, since June 2018, when Pakistan made a high-level political commitment to work with the FATF and the Asia-Pacific Group (APG) to strengthen its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and to address its strategic counter-terrorist financing-related deficiencies, “Pakistan’s continued political commitment to combating both terrorist financing and money laundering has led to significant progress”, the FATF observed.

Responding to a question, Mr Pleyer said it was a normal procedure that when a jurisdiction completes its action plan, it is reviewed by FATF and if found largely complete, is followed by an on-site visit by a technical team to verify whether the action plan is actually completed and sustainable in future.

Responding to another question, the outgoing FATF president, a German national, said the technical team for the on-site visit comprised qualified experts who exactly knew that needed to be examined.

“They are experienced people and have reviewed many other jurisdictions before. They will produce accurate and clear reports” so that October’s plenary could take an informed decision whether to delist Pakistan from the grey list, he emphasised.

In March, FATF noted that Pakistan had completed 32 out of 34 action points and called for quick action on the remaining deficiencies in its financial system and demonstrate prosecution of senior leaders of UN-designated terror groups.

By then, Islamabad had completed 26 of the 27 action items in its 2018 action plan of the FATF and six of the seven action items of the 2021 action plan of the APG ahead of deadlines.

In subsequent months, Pakistan ensured the conviction of a few high-profile commanders.

The completion of the FATF/APG action plan for the effectiveness of AML/CFT was also a structural benchmark of the International Monetary Fund (IMF) for end-March.

The government had given a commitment to the IMF to review by end-June the implementation of AML/CFT controls by financial institutions with respect to the tax amnesty programme for the construction sector and promised to “meet the timelines for the implementation of APG’s 2021 action plan, including on the mutual legal assistance framework, AML/CFT supervision, transparency of beneficial ownership information, and compliance with targeted financial sanctions for proliferation financing”.

The FATF also removed Malta from and added Gibraltar to the increasing monitoring list. It also decided to severely limit the Russian role and influence within the FATF and concluded that Russia would no longer hold any leadership or advisory roles or take part in decision-making on standard-setting, FATF peer review processes, governance and membership matters.

The watchdog also called upon its members “to remain vigilant of threats to the integrity, safety and security of the international financial system arising from the Russian Federation’s aggression in Ukraine and to possible emerging risks from the circumvention of measures taken in order to protect the international financial system”.

Published in Dawn, June 18th, 2022