Pakistan to remain on FATF grey list till Feb 2020


–Watchdog says country has made major progress on only five of 27 action items

–Finance Ministry says Pakistan informed FATF about its political commitment to fully implement action plan


PARIS: The Financial Action Task Force (FATF)– an inter-governmental body that combats money laundering, terrorist financing and threats to the international financial system – has decided to keep Pakistan on its grey list for another four months.

The decision was taken at the end of the FATF meeting that was held in Paris from October 13 to October 18. Pakistan has been given till February 2020 to fully implement the FATF’s 27-point action plan.

During the meeting, a Pakistani delegation led by Minister for Economic Affairs Hammad Azhar presented its compliance report.

“Despite a high level commitment by Pakistan to fix these weaknesses, Pakistan has not made enough progress,” Xiangmin Liu, president of the FATF, said in Paris.

“If by February 2020 the country has not made significant progress, we will consider further actions which potentially could include placing the country… on the blacklist,” he said.

Only two countries, North Korea and Iran, are on the FATF blacklist, which severely crimps their access to the global financial system as well as international aid.

The Pakistani government has demonstrated strong political will to implement its action plan,” Liu said.

“We will provide all the necessary training and assistance, and we have called on our members and our global network to help in that regard,” he added.

The FATF, in its statement, said that the country has made major progress on only five of 27 action items, with varying levels of progress made on the rest of the action plan.

“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 (AML) and counter-terror financing (CTF) regime and to address its strategic counter-terrorist financing-related deficiencies, Pakistan has made progress towards improving its AML/CFT regime, including the recent development of its money laundering/terror financing risk assessment,” read the statement.

Earlier, Pakistan had failed to meet the January and May deadlines set by the FATF for implementing its action plan.

The FATF had put Pakistan on its grey list in June 2017 because of deficiencies in the country’s Anti-Money Laundering and Countering of Terrorist Financing regulations.

Pakistan, which accuses India of lobbying to blacklist it, relied for support on friends including China, as well as Turkey and Malaysia who batted for Pakistan during the meeting. Reuters had earlier reported that in a recent visit to Beijing, Prime Minister Imran Khan secured a guarantee from China that Pakistan would not be placed on the blacklist.

In its response to the development, the Pakistan finance ministry said in a statement that Pakistan’s delegation at the FATF reaffirmed its political commitment to fully implement the action plan.

“The plenary meeting decided to maintain status quo on the FATF action plan.”

“The FATF meeting considered Pakistan’s progress report on the FATF action plan and Pakistan’s APG Mutual Evaluation report (MER),” it said.

According to the statement, the delegation also held sideline meetings with various delegations and briefed them about the progress made by Pakistan on the FATF action plan and steps taken for strengthening its AML/CFT framework.

A session on technical assistance and training needs of Pakistan was also organised in collaboration with United Nations Office on Drugs and Crime (UNODC) and APG Secretariat which was attended by a number of interested countries and multilateral agencies including China, the United States, the United Kingdom, Canada, Japan, EU, World Bank, the International Monitory Fund, and the Asian Development Bank.

Pakistan was placed on the grey list by the FATF in June last year and was given a plan of action to complete it by October 2019.

A week before the meeting in Paris, the Asia Pacific Group (APG) said that Pakistan “largely but partially” complied with 36 parameters, while missing out on the remaining four, out of the total 40. The APG is a regional body of the FATF, which requires its members to undergo mutual evaluation of the anti-money laundering and combating the financing of terrorism frameworks.

In its 228-page ‘Mutual Evaluation Report’ released on October 2, the APG said out of the FATF’s 40 recommendations on curbing money laundering and combating the financing of terrorism, Pakistan was fully compliant only on one. It was largely compliant on nine, partially compliant on 26 and non-compliant on four recommendations.

Being on the grey list doesn’t come with any sanctions, but if we remain on this list, we face the risk of being put on the black list. This is where it gets problematic.

Being on the black list means our banking system will be regarded as one with poor controls over AML and CFT standards — forget bringing PayPal to Pakistan, expatriates will find it difficult to send remittances and traders’ cost of business will increase because our banks will face higher scrutiny in international payments and foreign banks might not even do business with Pakistani banks. The government, too, will struggle to raise funds from international markets if we are placed on the black list.