Pakistan remains on global watchdog's terror financing ‘grey list'

Financial Action Task Force plenary session in progress on Feb. 19, 2020 in Paris. (Photo courtesy: FATF/File)
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Updated 24 October 2020

Pakistan remains on global watchdog's terror financing ‘grey list'

  • The country has completed 21 out of 27 items of the global financial watchdog’s action plan, acknowledges FATF officials
  • The government of Pakistan has signaled the commitment to complete the rest of the action plan, says the FATF president

KARACHI: The global financial watchdog, the Financial Action Task Force (FATF), decided on Friday to keep Pakistan on its “grey list” while acknowledging that the country had made significant progress in meeting international anti-terrorism financing norms and should not be downgraded to the “blacklist.”

The FATF began its virtual plenary meeting on October 21 under the first two-year German presidency of Dr Marcus Pleyer.

“Pakistan will remain our increased monitoring list,” he announced after the end of the conference. “The plenary recognizes that Pakistan has made progress. The government has now completed 21 out of 27 items of its action plan. The government of Pakistan has signaled the commitment to complete the rest of its action plan.”

“Even though Pakistan has made progress it needs to do more,” he continued. “It cannot stop now and needs to carry out reforms in particular to implement targeted financial sanctions and prosecuting sanctions financing terrorism.”

Responding to a question, the FATF president said that onsite inspection would be carried out after the next plenary in February 2021 to decide about Pakistan’s exclusion from the grey list.

 

 

Pakistan was placed on the list of countries with inadequate controls over terrorism financing by the FATF in June 2018.

The Asia-Pacific Group on Money Laundering (APG), an inter-governmental organization in the Asia-Pacific region, issued the first Follow Up Report (FUR) on Pakistan last month.

The report reflected the country’s performance until February 2020 and noted that it had complied with only two recommendations related to financial institution secrecy laws and financial intelligence units out of 40 recommendations on the effectiveness of anti-money laundering and combating financing terror (AML/CFT) system.

However, Pakistan managed to pass three crucial FATF-related laws during a joint session of parliament in September this year. With these laws, the country managed to comply with most of the legislation required by the international watchdog to strength the country’s financial system.

The FATF “strongly” urged Pakistan in February this year to complete its full action plan by June 2020, warning it would take action against the country which could include advising financial institutions to give special attention to business relations and transactions with Pakistan. Later, the deadline was extended and the country was given time until October 2020 due to the COVID-19 pandemic.

Pakistan also punished Hafiz Saeed, a Jamaat-ud-Dawa leader, in a terror financing case and decided to send him to prison for five and a half years.

Commenting on the FATF decision, financial experts said the decision to keep Pakistan on grey list owed to the government’s hasty legislation.

“The most vital issue relates to the roles assigned to the AML-CFT authority and self-regulatory bodies. These laws give powers to regulate AML-CFT to various government and professional bodies. They were not carefully drafted, create conflict of interest, and are complicated and ambiguous,” Dr Ikram ul Haq, a Lahore-based senior economist, said after the FATF decision.

The FATF blacklist have international pariah states like Iran and North Korea, and these countries are shunned by international financial institutions.


Pakistan Steel Mills workers say will challenge mass layoffs in court

Updated 29 November 2020

Pakistan Steel Mills workers say will challenge mass layoffs in court

  • PSM management argues the company’s accumulated losses reached Rs212 billion ($1.33 billion) in June
  • The termination of 4,500 contracts is believed to be the biggest layoff from a single entity in Pakistan’s history

KARACHI: Pakistan Steel Mills (PSM) employees are going to challenge in court the company’s recent decision to terminate the contracts of thousands of workers, union representatives said on Sunday.

The management of the state-owned company on Friday handed letters of termination to some 4,500 employees, arguing that PSM’s accumulated losses had reached Rs212 billion ($1.33 billion) in June, when the government decided that 9,350 workers would have to be fired for the dysfunctional enterprise to be revived.
“PSM has terminated 4,500 employees in the first phase of government’s plan to lay off 9,350 employees ... The employees have refused to accept this termination they have registered protests and have decided to challenge this decision in court next week,” Mirza Maqsood, President of Voice of Pakistan Steel Officers Association, told Arab News.

Located 40 kilometers from Karachi, Pakistan’s largest industrial complex with a steel production capacity of 1.1 million tons has been dysfunctional for the past few years. Its operations were suspended in 2015.
“Neither the Company has funds to revive the Mills nor are funds available from any other source to revive the Steel Mill. In any case, revival of the mill would require, firstly massive investment and secondly, entail a period of at least two years,” reads a PSM termination letter seen by Arab News.
The layoff was defended by federal Industries and Production Minister Hammad Azhar, who on Saturday said the terminated employees would be given compensation of Rs2.3 million on average.

“Since the closure of the mill, the government has paid around Rs35 billion as salaries and Rs20 billion as arears to the employees,” he said.

The discharge of workers is said to be one of the biggest layoffs of employees from a single government entity in the country’s history. 
 Karamat Ali, executive director at Pakistan Institute of Labor Education & Research (PILER), said the PSM layoff in unprecedented.
“No such number of employees have ever been fired from a single government institution,” he said.
The decision was also opposed by the provincial government of Sindh, which vowed to support the affected employees. 
“This is wrong and injustice. They (the federal government) must adhere to their earlier stance and commitments of turning the state institutions around with the help of their champions. I am with the employees,” Sindh Labor Minister Saeed Ghani told Arab News.
Mumrez Khan, convener of a representative body of employees, pensioners, suppliers, dealers and contractors of PSM, said that no serious efforts have been made by the federal government to revive the mill, claiming that negligence had caused losses even higher than those cited by PSM management.

“The accumulated losses have swelled to $12 billion on the account of closure of plants, revenue to the government and imports of steel products,” he said.