Pakistan to stay on grey list, announces FATF

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PARIS – The Financial Action Task Force (FATF) on Thursday announced that Pakistan will continue to remain on its grey list despite a satisfactory performance by the South Asian country.

FATF President Dr Marcus Pleyer while announcing the decision at the culmination of the five-day plenary session said, “Pakistan has made significant progress and it has largely addressed 26 out of 27 measures.”

He categorically stated that Pakistan will have to address all points of the action plan to exit from FATF’s “increased monitoring list”, also known as the grey list.

“In 2019, the regional partner of FATF identified problems in Pakistan’s anti-money laundering measures. But since then it has improved. There remains risk of money laundering and subsequently FATF had discussions with Pakistan.

“I want to thank the Pakistan government for their continued commitment to address the concerns and make the necessary changes they were asked to effect,” Pleyer added.

Pakistan was placed on the grey list by the Paris-based FATF in June 2018 and the country has since been making efforts to come out of it.

The next plenary meeting is due to take place in October.

FATF’s Complete Statement on Pakistan

Since June 2018, when 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 terrorist financing-related deficiencies, Pakistan’s continued political commitment has led to significant progress across a comprehensive CFT action plan.

The FATF recognizes Pakistan’s progress and efforts to address these CFT action plan items and notes that since February 2021, Pakistan has made progress to complete two of the three remaining action items on demonstrating that effective, proportionate and dissuasive sanctions are imposed for TF convictions and that Pakistan’s targeted financial sanctions regime was being used effectively to targeted terrorist assets. Pakistan has now completed 26 of the 27 action items in its 2018 action plan.

The FATF encourages Pakistan to continue to make progress to address as soon as possible the one remaining CFT-related item by demonstrating that TF investigations and prosecutions target senior leaders and commanders of UN designated terrorist groups.

In response to additional deficiencies later identified in Pakistan’s 2019 APG Mutual Evaluation Report (MER), Pakistan has made progress to address a number of the recommended actions in the MER and provided further high-level commitment in June 2021 to address these strategic deficiencies pursuant to a new action plan that primarily focuses on combating money laundering.

Pakistan should continue to work to address its strategically important AML/CFT deficiencies, namely by:

(1) enhancing international cooperation by amending the MLA law

(2) demonstrating that assistance is being sought from foreign countries in implementing UNSCR 1373 designations

3) demonstrating that supervisors are conducting both on-site and off-site supervision commensurate with specific risks associated with DNFBPs, including applying appropriate sanctions where necessary

(4) demonstrating that proportionate and dissuasive sanctions are applied consistently to all legal persons and legal arrangements for non-compliance with beneficial ownership requirements

(5) demonstrating an increase in ML investigations and prosecutions and that proceeds of crime continue to be restrained and confiscated in line with Pakistan’s risk profile, including working with foreign counterparts to trace, freeze, and confiscate assets

(6) demonstrating that DNFBPs are being monitored for compliance with proliferation financing requirements and that sanctions are being imposed for non-compliance.

Hammad Says Pakistan to fully implement action plan within 12 months

After FATF’s announcement, Federal Minister for Energy Hammad Azhar said that Pakistan will implement the new action plan on money laundering within 12 months.

Addressing a press conference, Azhar explained that FATF is not like it was 10 years ago, adding that Pakistan has made significant progress on the action plan.

He said that Pakistan has implemented 26 out of the 27 points, adding said that the last point will be implemented within 3 or 4 months.

Pakistan has not been removed from the grey list but the global body has acknowledged Pakistan’s progress.

FATF has no justification to keep Pakistan on grey list, says FM Qureshi

Earlier this week, Foreign Minister Shah Mahmood Qureshi said that the Financial Action Task Force (FATF) has no justification to keep Pakistan on its grey list as the latter had completed all technical requirements.

The foreign minister in a statement published by Radio Pakistan said, “We had been given twenty-seven action items; out of which work on twenty-six has been completed. He said vigorous work has also been done on the 27th point”.

Pakistan has taken solid measures to curb money laundering and terror financing, adding that India wants to use the platform for political purpose, but it should not be allowed for this.

The statement comes as five-day plenary session of the international watchdog is underway in Paris. The outcomes of the meeting will be published on Friday (June 25).

APG report on Pakistan

Earlier this month, the Asia/Pacific Group on Money Laundering (APG) issued its second follow-up report, announcing that Pakistan has achieved a compliant rating in 31 out of 40 FATF recommendations.

Following the report, a statement issued by the finance ministry said, “These results prove the sincerity along with resolve of the Government in complying with FATF requirements”.

These results are also a manifestation of the irreversibility and sustainability of the complete process in bringing Pakistan at par with Global AML/CFT standards. These results are manifestation of a whole of government approach adopted to achieve the same.

An upgrade of 21 Recommendations within this short period of time remains unprecedented in FATF history.

FATF’s Mutual Evaluation Report (MER) of jurisdictions is assessed in two domains i.e., Technical Compliance/Legal Instruments (40 FATF Recommendations) and Demonstration of Effectiveness (11 Immediate Outcomes).

Pakistan’s MER was adopted in October 2019 in which Pakistan was rated compliant and largely complaint in 10 out of 40 FATF Recommendations for the Technical Compliance.

After adoption of MER, Pakistan was placed under Post Observation Period by FATF which expired in February 2021.

During the said period, Pakistan carried out major legal reforms with the enactment of 14 Federal Laws & 3 Provincial Laws along with relevant rules and regulations.

The laws not only strengthened the systems in Pakistan but also brought in the sustainability. Pakistan submitted its report to FATF on its Technical Compliance on 1st October 2020.

APG has acknowledged that Pakistan has made notable progress in addressing the Technical Compliance deficiencies identified in its MER and has been re-rated compliant /largely compliant in 31 out of 40 FATF Recommendations. Pakistan has also submitted re-rating requests to APG on four more recommendations in next follow-up report which are under review by APG.

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