ISLAMABAD: Pakistan is doing “our best” to improve counter-terror financing operations in line with an internationally agreed action plan, the finance ministry said on Saturday, a day after global watchdog, the Financial Action Task Force, gave Islamabad until October to complete the program.
Since June last year, FATF already has Pakistan on its “gray list” of countries with inadequate controls over curbing money laundering and terrorism financing. On Friday it said it was concerned Pakistan had failed to complete the agreed action plan first by a January deadline and then again by a May deadline.
If Pakistan does not comply with an agreed action plan by October this year, it could likely result in sanctions, which would hurt the country’s economy and exports. FATF will formally announce its decision in Paris after a plenary that starts on October 13.
“We are doing our best to implement the action plan agreed upon with FATF,” Dr. Khaqan Hassan Najeeb, Finance ministry spokesman, told Arab News.
“FATF strongly urges Pakistan to swiftly complete its action plan by October 2019 when the last set of action plan items are set to expire,” the watchdog said in a statement on Friday. “Otherwise, the FATF will decide the next step at that time for insufficient progress.”
Khurram Husain, business editor for Pakistan’s Dawn newspaper, said it seemed that Pakistan had been given one last chance to deliver on specific conditions laid down by the FATF.
“In the case of failure, it looks likely that there will be blacklisting of Pakistan in October,” he said, adding that being placed on the blacklist would make the country’s economic interactions with the outside world “very expensive.”
“At a time when the country is struggling to revive its exports, this [the blacklisting] will be yet another hurdle,” Husain said.
According to the 36-nation FATF charter, the support of at least three member states is essential to avoid blacklisting. India – Pakistan’s arch-rival and co-chair of the joint group of FATF and Asia Pacific Group – has been pushing for Islamabad to be downgraded from a grey to a black list.
FATF and other world powers have been pushing Pakistan since 2015 to initiate anti-money laundering and terrorism financing actions but “we have not been able to undertake them,” Dawn’s Husain said.
“Now there is a last chance that has been given [to Pakistan], and we have a few months to do what we have not been able to do in the last four years.”
FATF, he said, would no longer be satisfied with Pakistan simply “passing laws and regulations … [but was] looking for specific actions on the ground against specific entities.”
“We want Pakistan downgraded on the FATF list,” Indian Finance Minister Arun Jaitley told reporters in May.
The call came a day after India claimed a diplomatic victory with a UN Security Council committee blacklisting the founder of the Pakistan-based Jaish-e-Mohammed (JeM) militant group, Masood Azhar.
His group claimed responsibility for a February suicide bombing that killed at least 40 Indian paramilitary police in the Indian-controlled part of the disputed Kashmir region, an attack that brought the nuclear-armed neighbors to the brink of war.
Pakistan’s ally China had repeatedly opposed efforts at the United Nations by Western powers to directly sanction Azhar, even though the group had already been blacklisted by the UN Security Council in 2001.
Azhar’s freedom within Pakistan has been a sore point in the relationship between Western countries and Pakistan, and has led to repeated accusations by India that Islamabad uses and harbors militant groups to further its foreign policy agenda. Pakistan denies such accusations.
Senior columnist Mosharraf Zaidi said there was no imminent chance of Pakistan being blacklisted by FATF but urged the government to address the “factors” which had led to the country being included in the grey list.
“This [blacklisting of Pakistan] is not going to happen anytime soon as they [the world powers] still need Pakistan to do a lot for them [for peace in Afghanistan],” he told Arab News, referring to Pakistan’s role in a negotiated settlement to a 17-year-long war in neighboring Afghanistan. However, he cautioned that being put on a blacklist would stand “in the way of economic growth” and Pakistan should take FATF-defined actions in the national interest.
FATF has asked Pakistan to work on implementing its action plan to address its strategic deficiencies, including by: (1) adequately demonstrating its proper understanding of the TF (terror financing) risks posed by the terrorist groups , and conducting supervision on a risk-sensitive basis; (2) demonstrating that remedial actions and sanctions are applied in cases of AML/CFT (anti-money laundering/counter terrorist financing) violations, and that these actions have an effect on AML/CFT compliance by financial institutions; (3) demonstrating that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS); (4) demonstrating that authorities are identifying cash couriers and enforcing controls on illicit movement of currency and understanding the risk of cash couriers being used for TF; (5) improving inter-agency coordination including between provincial and federal authorities on combating TF risks; (6) demonstrating that law enforcement agencies (LEAs) are identifying and investigating the widest range of TF activity and that TF investigations and prosecutions target designated persons and entities, and persons and entities acting on behalf or at the direction of the designated persons or entities; (7) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions and enhancing the capacity and support for prosecutors and the judiciary; and (8) demonstrating effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all 1267 and 1373 designated terrorists and those acting for or on their behalf, including preventing the raising and moving of funds, identifying and freezing assets (movable and immovable), and prohibiting access to funds and financial services; (9) demonstrating enforcement against TFS violations including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases; (10) demonstrating that facilities and services owned or controlled by designated person are deprived of their resources and the usage of the resources.