Syed Qamar Afzal Rizvi
THE Asia-Pacific Group (APG) on money laundering has retained Pakistan on its “Enhanced Follow-Up” list for meagre progress on technical recommendations of the Paris-based Financial Action Task Force (FATF), the media reported on Monday. Despite the revelation of the APG report on Pakistan manually evaluated in August 2020, Islamabad, objectively hopes from the upcoming FATF’s virtual plenary meeting to be held on October 21-23 in Paris that the forum would make an objective review of Pakistan’s performances vis-à-vis the domestic legislation Pakistan has profoundly made in September 2020. The first Follow-Up Report (FUR) on Mutual Evaluation of Pakistan released by APG, a regional affiliate of the FATF, showed Pakistan improving its full compliance on two of the 40 FATF recommendations on the effectiveness of anti-money laundering and combating financing terror (AML/CFT) system, Dawn news reported. While the APG report has come a week before FATF’s virtual review meeting scheduled to be held from 21 to 23 Oct, it has no immediate bearing on upcoming assessment of Pakistan whether it should be retained or moved out of grey list.
According to reports, Pakistan has so far made robust progress on 27 action points, including necessary legislation in 15 areas. 41-member APG had adopted the third Mutual Evaluation Report on Pakistan during the August 13-18 meetings in Canberra, Australia and downgraded the country to “Enhanced Follow-up” category over technical deficiencies to meet normal international financial standards by October 2018. As a result, Pakistan is duly required to submit quarterly progress reports, instead of biannual, to the APG, to show improvement in its technical standards on AML/CFT. The APG Mutual Evaluations is a peer-review system to determine whether countries meet the compliance standards for money laundering and terror financing. After a country submits a Mutual Evaluation report, APG members can decide to place a member either through regular or enhanced follow-up. While a regular follow-up means just biennial reports, a country put under enhanced follow-up has to send four reports of compliance the following year.
The APG’s report came ahead of the virtual FATF plenary scheduled for October 21-23 during which it would be decided if Pakistan should be excluded from its grey list, based on a review of Islamabad’s performance to meet global commitments and standards on fight against money laundering and terror financing (ML&TF).The updates and information provided by the assessed member will provide key information that will enable the preparatory work to be carried out prior to the on-site visit. This preparatory work includes understanding the member’s ML and TF risks, identifying potential areas of increased or reduced focus for the on-site (through a scoping exercise), and preparing the draft TC annexe. Members should provide the necessary updates and information to the Secretariat no less than six months before the on-site visit, or up to eight months if agreed. For some members, AML/CFT issues are addressed not just at the national government level, but also at state/provincial or local levels. Such members will need to indicate the AML/CFT measures that are the responsibility of state/provincial/local level authorities and provide an appropriate description of these measures. Assessors should also be aware that AML/CFT measures may be implemented at one or more levels of government. Assessors should therefore examine and take into account to the extent practical all the relevant measures, including those taken at a state/provincial/local level. Equally, assessors should take into account and refer to any supranational laws or regulations that apply to a member.
FATF had placed Pakistan on its grey list in June 2018 while asking Islamabad to implement a plan of action to curb money laundering and terror financing by the end of 2019 but the deadline was extended later on due to COVID-19 pandemic. While seeking to wriggle out of the FATF’s grey list, debt-ridden Pakistan in August imposed financial sanctions on 88 banned terror groups and their leaders. In February, the FATF had given Pakistan (which had missed 13 targets), a four-month grace period to complete its 27-point action plan vis-à-vis the AML/CFT. Subsequently, in its third plenary held in June, the FATF retained Pakistan in the grey list. During the current year, Pakistan has made systematic legislation in line with FATF recommendations. The said legislation was complemented gradually via three gradual phases: firstly, Phase I (February to July 2020): Prior Bills Receiving Presidential Assent, (i) Foreign Exchange Regulations (Amendment) Act, 2020, (ii) Anti-Money Laundering (Amendment) Act, 2020, (iii) NACTA (Amendment) Act, 2020, (iv) Anti-Terrorism (Amendment) Act, 2020, (v) Mutual Legal Assistance (Criminal Matters) Act, 2020 Phase II: secondly (July – August 2020): New FATF-related Legislation, (vi) UN Security Council (Amendment) Act, 2020, Anti-Terrorism (Second Amendment) Act, 2020, (vii) Companies (Amendment) Bill, 2020, (viii) Limited Liability Partnership (Amendment) Act, 2020, (ix) Islamabad Capital Territory Trust Act, 2020, (x) Control of Narcotics Substance (Amendment) Act, 2020, and thirdly, Phase-III (September 2020): Bills passed in the Joint Parliamentary Session, (xi) Anti-Terrorism (Third Amendment) Act, 2020, (xii) Anti-Money Laundering (Second Amendment) Act, 2020, (xiii) Islamabad Capital Territory Waqf Procedure Act, 2020.
As for Pakistan, it holds warranted concerns that with Pakistan’s continuation in the ”grey list”, it seems difficult to get financial aid from the International Monetary Fund (IMF), World Bank, Asian Development Bank (ADB) and the European Union, thus further enhancing problems for Pakistan amid the ongoing economic challenges because of the COVID-19. The APG report noted that Pakistan considered 12 terrorist organisations, including eight UN-designated entities of concern (EOCs), for threat profiles but only in terms of inflows and not outflow of funds to support terrorist activities. But an objective analysis suggests that though the coming FATF plenary will duly consider the APG report on Pakistan, it may not justifiably ignore the initiatives that Pakistan has taken recently. The Asia-Pacific Group (APG), a regional affiliate of the Paris –based FATF body, reviewed Pakistan’s actions to counter-terror financing and money laundering at a virtual meeting on 15 and 16 Sept. At the virtual meeting, China expectedly backed Pakistan’s actions to counter-terror financing, When Yao Jing, China’s Outgoing Ambassador to Pakistan, was quoted in an official statement as expressing “his confidence that FATF’s October review will go well for Pakistan”.
—The writer, an independent ‘IR’ researcher-cum-international law analyst based in Pakistan, is member of European Consortium for Political Research Standing Group on IR, Critical Peace & Conflict Studies, also a member of Washington Foreign Law Society and European Society of International Law.
