ISLAMABAD: Pakistan’s Ministry of Finance said on Monday that it has developed an action plan for implementation of Asia-Pacific Group on Money Laundering’s (APG) – a regional affiliate of the Financial Action Task Force (FATF) – recommended actions in its recent mutual evaluation report for the country to curb money-laundering and terrorism financing.
The APG 228-page report that was released on Sunday showed that Pakistan had either fully, largely, or partially complied with 36 of the 40 parameters set by the FATF to exit its gray-list. Islamabad was formally placed on the FATF’s 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 been trying to strengthen its legal and financial systems to cope with the requirement.
“An internal action plan has been developed for phase-wise implementation of the actions recommended on the basis of the mutual evaluation report,” the finance ministry said on Monday in a statement.
The report comes just a week ahead of the FATF’s plenary in Paris [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 on one aspect relating to financial institutions secrecy laws. It was found “partially compliant” on 26 recommendations and “largely compliant” on nine others.
The ministry said that Pakistan has since then made “considerable progress” to address the deficiencies identified in the report including “updating of National Risk Assessment on Money Laundering and Terrorist Financing, effective implementation of targeted financial sanctions ….. effective international cooperation on money-laundering and terrorism financing.”
On the other hand, the APG report has provided a summary of the anti-money laundering [AML] and countering the financing of terrorism [CFT) measures taken by Pakistan as required by the FATF.
The report says the State Bank of Pakistan does not have a clear understanding of the money-laundering and terrorism financing risks unique to the sectors it supervises. The State Bank of Pakistan is improving its understanding and is implementing a risk-based approach including conducting regular on-site and thematic 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.
Although terrorism (excluding TF) poses a significant risk to the security, economic and territorial integrity of Pakistan, the seizure and confiscation amount is nil, it pointed out.
The report says that in view of the relatively high number of investigations into money-laundering offenses the lack of confiscation action reflects that the focus of the investigations and prosecutions are 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, the senior economist, said that Pakistan cannot be included in the FATF’s blacklist on the basis of the APG report as the country has shown “significant progress” on 36 out of 40 parameters of the watchdog.
“This report is 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.
Earlier, Islamabad rejected Indian Defense Minister Rajnath Singh’s recent statement that FATF can “blacklist Pakistan anytime for terror financing.”
Pakistan’s Foreign Office said that Singh’s statement “reinforces Pakistan’s concerns, repeatedly highlighted to the FATF membership, about India’s attempts to politicize the FATF proceedings to further its narrow, partisan objectives.”