THE Asia Pacific Group (APG) adopted Pakistan’s third mutual evaluation report (MER) on Wednesday, and identified a number of areas where further action was required to strengthen anti-money laundering and combating the financing of terrorism framework. The APG held its 22nd annual meeting in Canberra from 18 to 23 August, a high-level Pakistani delegation headed by State Bank of Pakistan Governor Dr. Reza Baqir attended the meeting. According to a statement issued by the Ministry of Finance, the report adopted at the meeting covered the period of February to October 2018. However, it did not cover the areas in which the Government of Pakistan made substantial progress since October 2018. Therefore, the APG assessment of Pakistan’s third MER may not truly reflect Pakistan’s existing ground realities that will be reviewed in the 5 September meeting to be held in Bangkok and then finally in Paris on 18-23 Oct.
In those meetings they will determine if Islamabad has delivered on its 27-point action plan committed to the FATF to exit the grey list. FATF’s Asia Pacific Group (APG) members have expressed their satisfaction over Pakistan’s measures vis-à-vis legislation being made, rules being improved and actions taken against banned outfits. It also referred to revision in risk assessments of all corporate and non-corporate manuals, entities and outfits, and also strict implementation of laws for curbing money laundering. It was told about Pakistan’s legislation, including imposition of heavy fines and sentences for convicts in combating money laundering. The members were told that all travellers within Pakistan have been forbidden from carrying more than $10,000 under the new rules except with the permission from the State Bank of Pakistan (SBP). After adopting Pakistan’s third Mutual Evaluation Report (MER), the APG is expected to make public its assessment shortly.
Reportedly, Indian lobby’s conspiracy in the FATF’s APG for downgrading Pakistan to the blacklist has failed as APG member countries were satisfied following examination of the analytical report. Officials said that the proposed laws’ clearance by parliamentary committees had been welcomed but would need approval by Parliament for implementation before the October 18-23 final review. The amendments in foreign exchange regulation laws (FERA) to restrict domestic movement of currency beyond a certain limit are viewed by Pakistani officials as a key development to curb the practice of Hawala/Hundi and other forms of illegal foreign exchange transactions. Amendments to FERA law through its section 23 enhanced punishments, made it a cognizable offence and gave powers to the FIA to take prompt action against illegal foreign exchange operators. The law enforcement agencies have taken actions in recent months against proscribed organizations such as Haqqani Network, Jamaatud Dawa and other banned outfits.
A supervisory framework and mechanism has also been put in place to ensure effective coordination mechanism across the chain of agencies, organizations and regulators at federal and provincial levels through dedicated focal persons. The APG will review the MER and present its report to the FATF next month. On the basis of the APG report, the FATF will make a decision in October whether to remove Pakistan from its grey list or keep it there. In June, the FATF had given Pakistan four months (till October) to improve its “counter-terrorist financing” operations in accordance with the agreed plan. However, in a statement on its website the FATF had expressed concern that “not only did Pakistan fail to complete its action plan items by January deadline; it also failed to complete its action plan items due by May 2019”. But this is not true.
Based in Paris, the FATF is an inter-governmental body that combats money laundering, terrorist financing and threats to the international financial system. It had placed Pakistan on the grey list in June 2017 because of deficiencies in the country’s Anti-Money Laundering and Countering of Terrorist Financing regulations. Pakistan’s credibility had suffered a severe jolt in February 2018, as then Foreign Minister Khawaja Asif reportedly violated the rules and informed the Pakistanis via Twitter that the FATF had decided not to put Pakistan in the grey list. “One tweet killed all our efforts and got us into the grey list,” said an official closely associated with the process. The official added that an inconsiderate Khawaja Asif had violated a basic norm; all plenary decisions are announced by the FATF President or Deputy at the end of the meeting, but Asif, in his foolish exuberance, trumped that norm.
India and the US used this violation to prevail even upon friendly China, the other co-chair of APG, to punish Pakistan for this violation. Hence; the FATF plenary had unanimously recommended placing Pakistan in the grey list from June 2018 onwards. This showed India’s omni-present role within FATF, particularly the co-chair of the APG being an Indian representative. The Indian influence indeed was instrumental in the rejection of a Pakistani request for removal of India from the co-chair of the Asia-Pacific Group to ensure that the FATF review process is fair, unbiased and objective. “We have serious reservations about India being the co-chair of the ten-member Asia Pacific Group of FATF… They keep leaking critical information and thereby compromise the confidentiality of the process. They punished Pakistan for leaking an internal decision but look the other way when similar information goes out from the Indian sources,” former Foreign Secretary Tehmina Janjua had said.
—The writer is a senior journalist based in Lahore.