The Financial Action Task Force (FATF) has decided to keep Pakistan on the watchdog’s “increased monitoring list”, also known as the grey list, till it addresses all items on the original action plan agreed to in June 2018, while it has also outlined a new action plan for the country.
The FATF has recognises Pakistan’s progress and efforts to address items in its country action plan that pertain to combating financing of terrorism. The one key action item still needs to be completed “which concerns the investigation and prosecution of senior leaders and commanders of UN-designated terror groups”.
This is not the first time that the country has been on this list though. Between 2012 and 2015, too, the country had been subject to ‘grey list’ monitoring before it was taken out after showing “significant progress in improving its (anti-money laundering and combating of terror financing) regime”.
At that time, FATF had said it notes that Pakistan has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies.
Later in June 2018, the country was again put on the grey list as FATF flagged its “strategic counter-terrorist financing-related deficiencies”. Pakistan was handed a list of 27 action points with which it had to comply before FATF again took it out of the grey list.
After successfully complying with 26 points out of 27, the FATF president announced a new action plan that largely focuses on money laundering risks. The FATF outlined six areas where Pakistan should continue to work to address its strategically important AML/CFT deficiencies:
(1) Enhancing international cooperation by amending the MLA (Mututal Legal Assistance) law;
(2) Demonstrating that assistance is being sought from foreign countries in implementing UNSCR 1373 designations;
(3) Demonstrating that supervisors are conducting both on-site and off-site supervision commensurate with specific risks associated with DNFBPs (Designated Non-Financial Business and Professions), including applying appropriate sanctions where necessary;
(4) Demonstrating that proportionate and dissuasive sanctions are applied consistently to all legal persons and legal arrangements for non-compliance with beneficial ownership requirements;
(5) Demonstrating an increase in ML (money laundering) investigations and prosecutions and that proceeds of crime continue to be restrained and confiscated in line with Pakistan’s risk profile, including working with foreign counterparts to trace, freeze, and confiscate assets; and
(6) Demonstrating that DNFBPs (Designated Non-Financial Business and Professions) are being monitored for compliance with proliferation financing requirements and that sanctions are being imposed for non-compliance.
Meanwhile, the FATF president said he wishes to “thank the Pakistani government for their continued strong commitment to this progress”. The next plenary meeting is due to take place in October.