FATF to decide Pakistan's grey list fate today

Pakistan has high hopes of getting its name struck off from the grey list of the Financial Action Task Force (FATF) as the Paris-based global watchdog holds the two-day plenary session starting today.

State Minister for Foreign Affairs Hina Rabbani Khar has already flown to Paris to attend the meeting in Paris. The watchdog on dirty money will hold its first plenary under the two-year Singapore Presidency of T Raja Kumar on October 20-21.

"Delegates representing 206 members of the Global Network and observer organisations, including the International Monetary Fund, the United Nations, the World Bank, Interpol and the Egmont Group of Financial Intelligence Units, will participate in the Working Group and Plenary meetings in Paris," the FATF said.

The watchdog will announce the outcome at a press conference after the meeting concludes. The country has remained on the ignoble list for almost 52 months.

In September this year, a 15-member FATF inspection team and its Sydney-based regional affiliate, Asia Pacific Group, flew to Pakistan. Team members assessed the country's rules, regulations, and institutional mechanisms.

The FATF team scrutinised arrangements placed by the ministries, relevant departments, regulators, and law enforcement agencies to verify whether or not these systems and procedures were sustainable to combat money laundering and terror financing on a permanent basis.

The FATF plenary will make the final decision after examining the assessment by the on-site team that visited Pakistan last month. Based on the team's report, the FATF is expected to provide relief to Pakistan after verifying the country's steps to implement the plan of action.

Federal Finance Minister Ishaq Dar, speaking to the media in Washington last week, assured that Pakistan will soon move out of the grey list.

Pakistan fulfills all the FATF conditions

The FATF placed Pakistan on its grey list in June 2018 for deficiencies in its legal, financial, regulatory, investigations, prosecution, judicial and non-government sectors to fight money laundering and combat terror financing considered a serious threat to the global financial system.

Islamabad has attempted to get its name struck from the grey list since. The FATF tasked Pakistan to implement two different action plans simultaneously, and the country has accomplished the conditions of the watchdog.

In June this year, the FATF expressed satisfaction that the country complied with all 34 points and recommended an onsite visit to verify the progress made by the country.

Islamabad made high-level political commitments to address these deficiencies under a 27-point action plan. But later the number of action points was enhanced to 34. The country had since been vigorously working with FATF and its affiliates to strengthen its legal and financial systems against money laundering and terror financing to meet international standards in line with the 40 recommendations of the FATF.

According to the Foreign Office, the focus of the visit was to validate on the ground Pakistan’s high-level commitment and sustainability of reforms in the AML/CFT regime and [it] looked forward to a logical conclusion to the evaluation process. The report of the FATF Onsite team will be discussed in FATF’s International Cooperation Review Group and plenary meetings.

The completion of the FATF/APG action plan for the effectiveness of AML/CFT was also a structural benchmark of the IMF for end-March 2022 and was achieved in June with a minor delay.

The government had given a commitment to the IMF to review by end-June 2022 the implementation of AML/CFT controls by financial institutions with respect to the tax amnesty programme for the construction sector and promised to “meet the timelines for the implementation of APG’s 2021 Action Plan, including on the mutual legal assistance framework, AML/CFT supervision, transparency of beneficial ownership information, and compliance with targeted financial sanctions for proliferation financing”.