ISLAMABAD: Finance Minister Ishaq Dar has announced that the Paris-based Financial Action Task Force (FATF) has removed Pakistan from its grey list and elevated it to white list following Islamabad’s legal and procedural actions vis-à-vis anti-money laundering/combating the financing of terrorism (AML/CFT).

Addressing a news conference on Friday, he said the government had been fighting a case for 21 months to get the country removed from the grey list. Had Pakistan remained in the grey list for another few months, it would have been demoted to the “black list”. Such a move means difficulties in opening letters of credit and a four per cent rise in cost.

Mr Dar said the FATF had included Pakistan in its Public Statement (grey listing) in Feb 2012 because of weak laws and actions against money laundering and terror financing.

He said the government had strengthened the anti-terror ordinance and made it a permanent law through parliament and then removed, in collaboration with the State Bank, FATF’s concern about the Chaman border point.

The government had been fighting a case for 21 months for the purpose

The government had taken a number of steps to address FATF’s concerns, but the presence of an “unfriendly country” in the group delayed Pakistan’s removal from the grey list.

The minister said he had then taken up the issue with the FATF president through a letter highlighting a number of steps Pakistan had taken, including making AML/CFT part of the National Action Plan against terror funding and reducing the actionable threshold for transactions to $2 million from $2.5m.

Consequently, the FATF had acknowledged Pakis-tan’s efforts at its plenary session on Friday and removed the country’s name from the grey list.

In its decision, the FATF praised Pakistan’s ‘significant progress’ in improving the AML/CFT regime and noted that the country had established a legal and regulatory framework to meet the commitments in its action plan regarding strategic deficiencies the FATF had identified in June 2010.

It said Pakistan was no longer subject to the task force’s monitoring process under its ongoing global AML/CFT compliance process. Pakistan would work with the Asia Pacific Group as it continued to address the full range of AML/CFT issues identified in its mutual evaluation report, in particular, fully implementing the UNSC Resolution 1267, FATF said in its decision.

The Financial Action Task Force, an inter-governmental body, was founded by the G-7 Group in 1989 to set standards for AML/CTF. It placed Pakistan on its grey list in Feb 2012, meaning that the country was not fully compliant with standards set by the FATF for combating money laundering and terrorist financing.

The designation was not only a scar on the country but also a major irritant in its dealing with the international financial sector.

DEFICIENCIES REMO-VED: All deficiencies in various facets of the regime have been removed, including additional legislation to fill the gaps that existed between AML and CFT. The most significant task was to amend the Anti-Terrorism Act, 1997, enabling law-enforcement agencies to pursue cases of terror financing, alongside anti-money laundering.

The law was amended twice to bring it in line with international standards set by the FATF and the United Nations.

Equally important, Pakistan also addressed concerns of the Asia Pacific Regional Review Group (AP-RRG) on enforcement actions against the UN-designated entities. Financial institutions have been barred from providing any services to such entities and associated individuals. Personal accounts have been prohibited for the use of any type of charitable donations.

The FATF’s regional review group visited Pakistan in December for an onsite review of AML/CFT reforms and expressed satisfaction over the country’s technical compliance with the requirements of the FATF action plan, to which Pakistan had agreed.

Finance Minister Dar said Pakistan’s exit from the grey list would encourage foreign investment and provide grounds for better assessment of its credit rating in the international market.

“Pakistan looks forward to continuing to work with the FATF and individual members to curb money laundering and terror financing in order to bring peace and protect the life and property of the people of Pakistan and international community,” he said.

Published in Dawn, February 28th, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play