ISLAMABAD: Pakistan’s foreign office on Monday rejected India’s defense minister’s recent statement that the Financial Action Task Force (FATF) could “blacklist Pakistan anytime” as the Asia-Pacific Group on Money Laundering (APG) said in one of its reports that Islamabad had either fully, largely or partially complied with 36 of the 40 parameters set by the global watchdog to curb money-laundering and terrorism financing.
Islamabad was formally placed on the FATF gray list in June last year due to “strategic deficiencies” in its anti-money laundering and terrorism financing regime. The South Asian nation has since accused its arch-rival India of trying to get Pakistan downgraded further to the watchdog’s blacklist.
The foreign office said in a statement on Monday that India’s Defense Minister Rajnath Singh’s remark reinforced “Pakistan’s concerns, repeatedly highlighted to the FATF membership, about India’s attempts to politicize the FATF proceedings to further its narrow, partisan objectives.”
Singh claimed last week that the FATF could “blacklist Pakistan for terror financing anytime.”
However, Pakistan said that India’s incessant smear campaign and blatant partisanship called into question its credentials to be the co-chair of the Asia-Pacific Joint Group reviewing Pakistan’s progress in implementing the FATF Action Plan.
“We hope that the broader FATF membership would take cognizance of India’s continuing malicious campaign against Pakistan and reject any attempt aimed at politicizing the FATF proceedings,” the foreign office said. “It is important for FATF to ensure that the process remains fair and unbiased.”
Meanwhile, the APG’s 228-page report on money-laundering and terror financing in Pakistan came just a week ahead of the FATF’s plenary in Paris on Oct 13-18 that would determine whether Islamabad should be removed from its gray list or downgraded further to its blacklist.
The report based on Pakistan’s performance as of October 2018 showed that the country was fully “compliant” only in one aspect relating to financial institutions’ secrecy laws. It was found “partially compliant” on 26 recommendations and “largely compliant” on nine others.
The ministry of finance declined to comment on the report on Monday, saying it was “already out and we have nothing to add to it.”
The APG report said the State Bank of Pakistan did not have a clear understanding of the money-laundering and terrorism financing risks unique to the sectors it supervised. It added that the SBP was improving its understanding and implementing a risk-based approach, including conducting regular onsite and thematic anti-money laundering and countering the financing of terrorism [AML/CFT] supervision activities.
“Some improvement in AML/CFT compliance is evident as a result of SBP’s supervision, but the value of monetary sanctions imposed is low,” the report said, adding that the Securities and Exchange Commission of Pakistan had also a limited understanding of the money-laundering and terrorism financing risks and had not implemented a risk-based supervisory approach.
Although terrorism (excluding TF) poses a significant risk to the security, economy and territorial integrity of Pakistan, the seizure and confiscation amount was nil, it pointed out.
The report said that in view of the relatively high number of investigations into money-laundering offenses, the lack of confiscation action reflected that the focus of the investigations and prosecutions was not specifically on tracing the money.
“In addition, TF [terrorism financing] confiscation amounts (approx. USD $107,000 in 5 years) needs to be improved further,” it added.
Muzamil Aslam, a senior economist, said that Pakistan could not be included in the FATF’s blacklist on the basis of the APG report as the country had shown “significant progress” on 36 out of 40 parameters of the watchdog.
“This report is a proof of our willingness to improve our legal and financial systems to meet the FATF’s demands. Therefore, it should help offset uncertainty in our capital market,” he told Arab News.