FATF partially happy with Pakistan

–APG’s Mutual Evaluation Report states Pakistan ‘largely but partially’ complied with 36 out of40 parameters

–Identifies preventive measures, financial intelligence, money-laundering and terror-financing investigations as Islamabad’s weaknesses

–FATF not satisfied with steps taken against terror outfits, including JUD, LeJ, JeM

ISLAMABAD: With the Financial Action Task Force (FATF) set to decide Pakistan’s fate in mid-October, its associate Asia-Pacific Group on Money Laundering (APG) has released an evaluation report on Pakistan’s compliance with the anti-money laundering regime, saying the country “largely but partially” complied with 36 parameters, while missing out on the remaining four.

On the basis of the 228-page Mutual Evaluation Report 2019, the global watchdog for terror financing and money laundering will decide whether to retain Pakistan on the greylist or remove it based on its past year performance.

The watchdog has not ruled out blacklisting the country and the meeting on October 13-18 will also consider this option.

The four missed parameters are Transparency & BO (beneficial owner/ownership of legal arrangements; DNFBPs (designated non-financial businesses and profession) customers’ due diligence; regulation and supervision of the DNFBPs; and mutual legal assistance freezing and confiscation.

The APG also stressed on risk policy, supervision of coordination, preventive measures, legal personnel arrangements, financial intelligence, money-laundering and terror-financing (TF) investigations, prosecution and confiscation, production of TF preventive measures and proliferation-financing (PF) financial sanctions as Pakistan’s weaknesses.

Furthermore, the report, while highlighting that Pakistan had only missed out on four parameters, also pointed out that its performance on international cooperation was “moderate”.

On September 9 in Bangkok, Pakistan submitted detailed answers to 125 questions posed by FATF on moves taken by it to combat money laundering and terror financing in order to move out of the greylist.

During the Bangkok negotiations, the FATF was apprised of measures taken by Pakistan to prevent suspicious transactions and officials were questioned about moves to restrict illegal activities and freeze the assets of proscribed organisations and groups.

The APG report said that in order to avoid blacklisting, Islamabad should “adequately identify and assess” money laundering and terror-financing risks as well as risks associated with the “terrorist groups operating on its soil”.

“Pakistan should adequately identify, assess and understand its ML/TF risks, including transnational risks and risks associated with terrorist groups operating in Pakistan such as Lashkar-e-Tayyiba (LeT), Da’esh, Al-Qaeda, Jamaat-ud-Dawa (JuD), Falah-i-Insaniat Foundation (FIF), Jaish-e-Muhammad (JeM), Haqqani Network (HQN), and this should be used to implement a comprehensive and coordinated risk-based approach to combating ML and TF,” the report stated.

It stated that Pakistan has not taken sufficient measures to fully implement UNSCR 1267 obligations against all listed individuals and entities – especially those associated with LeT/ JuD, and FIF as well as the groups’ leader Hafiz Saeed.

The APG further said that although Pakistan has taken some enforcement actions against hawala/hundi under the Foreign Exchange Regulation Act 1947, the country needs “major improvements”. “Pakistan has a mixed level of technical compliance with relevant FATF recommendations and major improvements are needed in Pakistan’s international cooperation actions against criminals and their assets,” the report stated.

“Due to the significant ML/TF risks posed by hawala/hundi, Pakistan should enhance enforcement actions against hawala/hundi under the Foreign Exchange Regulation Act 1947, and undertake ML and TF investigations and prosecutions of hawala/hundi operators where appropriate,” it said.

The report also said that there are “major technical shortcomings” in Pakistan’s legal framework and called for “fundamental improvements” to diminish the risks of money laundering and terror financing.

“Pakistan’s legal framework on transparency of legal persons and arrangements has moderate and major technical shortcomings (respectively). Moreover, fundamental improvements are required to Pakistan’s ability to effectively mitigate the risk of ML and TF through exploitation of those technical weaknesses,” it said.

Repeated attempts were made to contact officials at the Ministry of Finance but no response was received till the filing of this report.