ISLAMABAD: Pakistan on Friday dispatched a Terror Financing Risk Assessment Report electronically to the Financial Action Task Force (FATF) followed by a 12-member team to explain the action plan that the government intends to follow to come into compliance with international obligations and secure an exit from the grey list of the Paris-based watchdog.

A senior government official told Dawn that the high-level delegation led by Secretary Finance Arif Ahmed Khan left for Sydney, Australia to attend a three-day meeting of the FATF. The delegation comprised representatives of the State Bank of Pakistan (SBP), National Counter Terrorism Authority (NACTA), Federal Investigation Agency (FIA), Federal Board of Revenue (FBR) and Financial Monitoring Unit.

The official said the delegation will address questions and observations of the FATF on the basis of risk assessment report already transmitted to the global anti-terror financing watchdog. The report highlights the implementation status of plans for various agencies of the government on the FATF’s recommendations.

Islamabad’s report identifies Pak-Afghan and Pak-Iran borders as key routes for terror financing and money laundering

It said a total of 4,643 suspected transactions relating to terror financing and money laundering had been identified and blocked since 2015, including 3,677 suspected transaction reports and 966 financial intelligence reports. A total of 1,167 transactions were captured during 2018 alone, including 975 STRs and 210 financial intelligence reports.

The report identified some key routes of the terror financing and money laundering, saying Pak-Afghan and Pak-Iran borders were two key routes of such flows.

To address the challenge, checking and security systems at Pak-Afghan border had been strengthened with improved technology and vigilance while security had also been beefed up at Pak-Iran border.

The report said that the long coastal belt was also a source of smuggling and security was being tightened through law enforcement agencies, including through marine and coast guards. It said Afghan Transit Trade was also a source of such unregistered financial flows. All these channels were also being misused by foreign agencies to support terror-related activities.

The tools being used for financial transaction for terrorism included donations, cash smuggling, natural resources, drugs, non-governmental organisations and foreign agencies. The report said the FBR identified about 1,185 illegal transactions since 2015, followed by 1,049 by the SBP and about 1,295 by the FIA.

An official said that no amendment to the law was required for further proscription of organisations. The Foreign Office has given new guidelines, for regulators and law enforcement agencies, so once MOFAP will issue an SRO, the relevant agencies and regulators will move for swift action on that basis.

During the May and September meetings later this year, regulators and law enforcement agencies will be expected to demonstrate results in the form of investigations, prosecutions, convictions, supervisory actions, sanctions with resulting impacts on compliance by financial institutions, implementing cross-border currency and border controls and enforcement of regulatory regime at the borders. NACTA will be expected to enhance coordination with LEAs and CTDs coupled with effective implementation on UNSCR Sanctions.

In June 2018, Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its AML/CFT regime and to address its strategic counter-terrorism financing-related deficiencies by implementing a 10-point action plan to accomplish these objectives. The successful implementation of the action plan and its physical verification by the APG will lead the FATF to clear Pakistan out of its grey list or else move into the black list by September 2019. In August, the APG as part of the pre-site mutual evaluation identified a series of deficiencies in Pakistan’s anti-money laundering/counter-terror financing laws and mechanisms.

The authorities are required to upgrade agencies and their human resources to be able to handle foreign requests to block terror financing and freeze illegal and targeted assets. By the end of September next year, Pakistan has to comply with the action plan it had committed with the FATF in June to get out of the grey list or else fall into the black list. Over the next nine months, i.e. till September 2019, the government will complete the investigation into the widest range of terror financing activities, including appeals and calls for donations and collection of funds, besides their movements and uses. The outcome will be published at least twice before September next year.

Published in Dawn, January 5th, 2019