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FATF grey-listing: Pakistan is yet to out of the woods despite remarkable progress

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By Hamid Khan Wazir

The writer is a Islamabad-based journalist. He belongs to Tehsil Shakai of district South Waziristan, Khyber Pakhtunkhwa. He writes on various issues of public interest

In a shocking development, the Financial Action Task Force (FATF) decided to keep Pakistan on the grey list for another extended period till June 2021 despite the acceptance of the country’s tremendous progress in the given action plans.
The Plenary meetings of FATF were held virtually from 22-25 February 2021, where its members discussed a range of topics relating to Pakistan’s progress.

Pakistan has already sustained a staggering $38 billion economic losses due to the FATF decision to thrice placed the country on its grey list since 2008

It was disappointing, as there are examples where other nations were taken off the list of countries under enhanced monitoring by the global watchdog although they did far less than Islamabad which worked hard to tighten its anti-terror-financing and money-laundering controls over the last two years.
The country was placed on the grey list in June 2018 for failing to implement effective measures to stop terror financing and money laundering in the country.

Non-performance can lead to being described as a high-risk jurisdiction, subject to a call for action, commonly called blacklist, with lethal consequences like international financial exclusion.
Pakistan has already sustained a staggering $38 billion economic losses due to the FATF decision to thrice placed the country on its grey list since 2008, says a new research paper published by an independent think-tank, Tabadlab.
A large portion of $38 billion losses can be attributed to the reduction in household and government consumption expenditures, it added.
Pakistan was asked for complying with the three outstanding points of total 27 action plans, as the country succeeded in complying with 24 action plans.
The three remaining deficiencies, which the FATF asked Islamabad to address, related to terror-financing and effective implementation of United Nations Security Council (UNSC) Resolutions 1267 and 1373 against all designated terrorists.

These points include (1) demonstrating that TF investigations and prosecutions target persons and entities acting on behalf or at the directive of the designated persons or entities; (2) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions; and (3) demonstrating effective implementation of targeted financial sanctions against all 1,267 and 1,373 designated terrorists, and those acting for them or on their behalf.

Pakistan has made progress across all action plan items and has now largely addressed 24 of the 27 action items.

“Pakistan will remain on the grey list as some deficiencies still exist as out of 27 action plans, three still need to be addressed. I urge Pakistan to fully implement the action plan. When Pakistan completes its whole action, our onsite visit will verify sustainability and then FATF members will decide about Pakistan in the next plenary meeting in June 2021” the FATF’s President Dr Marcus Pleyer said while addressing an online news briefing from headquarters based in Paris.
It is pertinent to mention here that the FATF gauged Pakistan’s progress and stated that since June 2018, when Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its AML/CFT (Anti-Money Laundering/ Combating the Financing of Terrorism) regime and to address its strategic counter-terrorist financing-related deficiencies, Pakistan’s continued political commitment has led to significant progress across a comprehensive CFT action plan by demonstrating that aw enforcement agencies are identifying and investigating the widest range of TF [terror financing] activity, demonstrating enforcement against TFS (terror financing sanctions) violations, and working to prevent the raising and moving of funds including by controlling facilities and services owned or controlled by designated persons and entities.
Pakistan has made progress across all action plan items and has now largely addressed 24 of the 27 action items.
“As all action plan deadlines have expired, the FATF strongly urges Pakistan to swiftly complete its full action plan before June 2021,” it further stated. According to a statement issued by Pakistan’s Ministry of Finance on FATF’s decision for keeping Islamabad on the grey list for another extended period till June 2021 by stating that the FATF has appreciated Pakistan for the significant progress made on the entire action plan.

The next plenary tentatively scheduled for June 20-25 will then decide if Pakistan had completed all the action points effectively and release it from the grey list.

Pakistan has undertaken enormous work to strengthen its AML/CFT regime and address the strategic counter-terrorist financing-related deficiencies. In addition to the acknowledgment by FATF in its plenary statement that Pakistan has made significant progress on the entire action plan by addressing 24 out of the 27 items in the action plan, Pakistan has also made notable progress in the remaining 3 action items which also stand partially addressed.
As of now, all the 10 action items pertaining to the financial sector and border controls have been addressed. In relation to Terrorism Financing (TF) investigations and prosecutions, 6 of the 8 action items have been addressed, whereas, for targeted financial sanctions, 8 of the 9 action items also stand addressed. The progress on the remaining three action items is well underway with significant progress made so far.
Pakistan has now to report back with full compliance with all the 27 items after which FATF will send a technical team for onsite verification.
The next plenary tentatively scheduled for June 20-25 will then decide if Pakistan had completed all the action points effectively and release it from the grey list.

It goes without saying that complete compliance will bring its own dividends for the economy. The increasing inflow of remittances through legal channels is only one of the many economic benefits that Pakistan stands to reap from adopting global standards on illicit financing.

 

The writer is a Islamabad-based journalist. He belongs to Tehsil Shakai of district South Waziristan, Khyber Pakhtunkhwa. He writes on various issues of public interest. He also writes on issues of tribal districts especially health and education along with promoting tourism.

Hamid Khan Wazir could be reached at hkhanw@gmail.com

Central Desk
Central News Desk.

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