FATF compliance report

While the government continues to boast about economic stability and the stock market upturn, Pakistan’s presence on FATF’s grey list remains a chief reason why foreign investments have still not poured in.

Pakistan narrowly escaped getting further downgraded in September but had to take serious remedial measures to rectify the issue. The FATF had earlier sought replies on 27 questions pertaining to anti-money laundering initiatives and stopping terror financing. However, the government was able to satisfy the global body on just five points. 

Pakistan has now submitted another compliance report comprising answers to the remaining 22 questions. A follow-up meeting of the FATF will be held in Beijing on January 21. The final decision whether Pakistan remains on the grey list or not, will be made in February 2020 during a plenary review meeting in Paris.

The report details Pakistan’s actions against UN-designated terror groups and the sentences handed to them by the courts, while people working in such groups have been provided alternate employment. Pakistan also informed the FATF that it has taken control of 113 madrassahs. These seminaries are now being run under the supervision of assistant commissioners and have been allocated a budget.

The report also details investigation into the sponsors and facilitators funding terrorist activities. A process to stop hundi/hawala system and currency smuggling has been set up. This is one the key demands to stop the informal economy prevalent in the country, but the methodology is not provided. There is no system set up to regulate jewelry, real-estate businesses and the fees of lawyers.

The FATF has already acknowledged that Pakistan made tangible progress under the new government, but risks to the financial system have put the entire official machinery in an aggressive mode. In February, the government banned the Jamaat-ud-Dawa and its charity wing to address concerns that Pakistan supports these organisations.

Law enforcement agencies intensified a crackdown and arrested dozens of activists, while over 200 seminaries were taken over by the government. JuD chief Hafeez Saeed and other leaders are set to be indicted for terror financing charges on December 11.

Pakistan will have to take extra measures for the complete elimination of terror financing and money laundering. The nation will have come to off the grey list if Prime Minister Imran Khan’s vision for economic development is to be successful.