Pakistan wins FATF approval

ISLAMABAD: The Financial Action Task Force (FATF) has declared Pakistan as compliant on all 34 points of two action plans that can now pave the way for its removal from the grey list after an on-site inspection by a force team.

Though monitoring process will continue in the coming months, Pakistani authorities said that it was a unanimous decision for declaring Pakistan compliant on all 34 points. On the last two points, including terror financing and money laundering, the FATF cleared the country in its plenary meeting when action was taken against the leadership of proscribed outfits.

After four years of hectic work and implementing two action plans simultaneously, Islamabad has been found compliant on all 34 items. Now the FATF will dispatch its onsite inspection team to visit Pakistan probably within the next two months. After getting verification and confirmation with the help of an onsite visit, the FATF’s next plenary, expected to be held in October 2022, will confirm exclusion of Pakistan from the grey list.

FATF President Dr Marcus Pleyer, while addressing a press conference after the plenary meeting, noted that Pakistani authorities have done a lot of work. “I’m glad to say that they [Pakistan] have now largely addressed all 34 action items from their combined two action plans. Pakistan is not being removed from the grey list today. The country will be removed from the list if it successfully passes the onsite visit,” said Dr Pleyer.

When contacted, Director General (DG) Financial Monitoring Unit (FMU) Lubna Malik said the country made progress on all points and achieved prosecution and convictions against those involved in terror financing and money laundering. She said that the country also made progress in taking stern action against the leadership of banned outfits to demonstrate its seriousness, which helped convince the FATF to declare the country compliant. She said that the FATF did not convey a specific time-frame for an onsite inspection visit, but Pakistan wanted to convince the FATF to dispatch its team as early as possible.

The official sources said that the schedule of the onsite inspection was affected badly in the wake of the Covid-19 pandemic due to which many countries’ scheduled visits could not be accomplished in 2020 and 2021.

Now the restrictions of Covid-19 are being removed, so it is expected that the onsite inspection team of FATF, comprising the member countries, will soon visitPakistan probably in July or August so that Pakistan could get confirmation to come out from the grey list in coming October 2022, on the occasion of the upcoming plenary meeting of FATF.

Soon after the announcement, State Minister for Foreign Affairs Hina Rabbani Khar — who was leading Pakistan’s delegation at the plenary session in Berlin — congratulated the country after the watchdog declared both actions plans complete.

“International community has unanimously acknowledged our efforts. Our success is the result of four years of challenging journey. Pakistan reaffirms its resolve to continue the momentum and give our economy a boost,” said Khar while congratulating the Pakistan team at FATF.

Chief of the Army Staff General Qamar Javed Bajwa termed the completion of action plan of the FATF by Pakistan a great achievement. “Completion of FATF Anti Money-laundering (AML)/Combating the Financing of Terrorism (CFT) action plans by Pakistan is a great achievement,” Director General ISPR Major General Babar Iftikhar said while quoting the COAS on his twitter.

General Bajwa also observed that completing action plans of FATF was a monumental effort paving the way for the white-listing.

“Core cell at General Headquarters (GHQ) which steered the national effort, and civil-military team, which synergized implementation of action plan, made it possible, making Pakistan proud,” the COAS said.

The official sources said that the FATF team, in the coming visit, would hold meetings with representatives of different relevant law-enforcement agencies, regulators, and departments such as Federal Investigation Agency (FIA), State Bank of Pakistan (SBP), Federal Board of Revenue (FBR), Designated Non-Financial Businesses and Professions (DNFBPs), Securities & Exchange Commission of Pakistan (SECP), National Counter Terrorism Authority (NACTA), Counter-Terrorism Department (CTD), and provincial departments to gauge effectiveness of the measures for countering terror-financing and money-laundering.

The FATF plenary held its meeting in Berlin (Germany) from June 14 to 17 and, as expected, Pakistan was declared compliant on all 34 items of two action plans. Under the first plan, given to Pakistan in June 2018 after placing it on the grey list, Pakistan was asked to comply with 27 action plans within a year. Then another plan of action was handed over to Pakistan in June 2021 with another seven points of action, so the total number of action plans increased to 34 points.

In its statement issued on Friday after the plenary meeting, the FATF said that since June 2018, when Pakistan made a high-level political commitment to work with the FATF and Asia/Pacific Group (APG) to strengthen its AML/CFT [Anti-Money Laundering and Counter Financing of Terrorism] regime and address its strategic counter-terrorist financing-related deficiencies:

Pakistan’s continued political commitment to combating both terrorist financing and money laundering has led to significant progress. In particular, Pakistan demonstrated that terror-financing (TF) investigations and prosecutions target senior leaders and commanders of UN-designated terrorist groups and that there is a positive upwards trend in the number of money-laundering (ML) investigations and prosecutions, being pursued in Pakistan, in line with Pakistan’s risk profile. In addition, Pakistan also largely addressed its 2021 action plan ahead of the set times.

The FATF will continue to monitor the Covid-19 situation and conduct an onsite visit at the earliest possible date, the statement concluded.

Officials linked to departments working for fulfilling the FATF action plan said it was good news that Pakistan’s efforts have finally paid off. Pakistan has maintained the tradition of international regulations/ laws compliance. The FATF targets have finally accomplished.

They said Pakistan had proved to be a responsible state by implementing all the FATF points. On the directive of the Chief of Army Staff (COAS), the armed forces of Pakistan also played a key role, along with the government, and its national institutions.

India tried its level best to get Pakistan blacklisted, but the Pakistan Army foiled that conspiracy. The FATF had granted 27 points action plan (focused on terror financing (TF), out of which all 27 points were completed and seven points (focused on money laundering (ML) were also completed.

Both the action plans comprised a total 34 action items, all of them stands addressed in June 2022, after four years of consistent implementation of anti-money laundering (AML) and counter-terror financing (CFT) systems.

A special cell at the GHQ, headed by DGMO, was established in 2019 on the orders of COAS after consultation with the government. When the GHQ cell took over the responsibility, only five points were completed. That cell adopted established comprehensive mechanism between more than 30 departments, ministries and agencies, and ensured implementation of the policies. The GHQ cell formulated a comprehensive strategy and a detailed roadmap to address the concerns of FATF and completed its action plan, well before the timelines, set by FATF, i.e. January 2023.

The FATF teams will undertake onsite visit soon to check sustainability and irreversibility of AML/ CFT systems in Pakistan by Sept 2022, which will lead to white-listing by October 22. The GHQ cell has strengthened its Anti-Money Laundering (AML) and Counter Terror Financing (CFT) regime to counter vulnerabilities and threat as envisaged during the national risk assessment.

The GHQ cell demonstrated significant increase in ML investigations and prosecutions during the last 13 months and reported more than 800 cases of ML. The cell demonstrated substantial increases in the number and value of assets, seized over this reporting cycle, with 71 per cent increase in number of assets and 85pc increase in value of assets seized.

The FATF acknowledged the progress of Pakistan on listings of designated individuals when the UNSC accepted the listing proposal for UNSC 1267 related to one individual. Overall progress made by Pakistan over last 2 years includes:

Pakistan enacted standalone MLA Act 2020 with substantial increase in processing of formal/ informal Mutual Legal Assistance (MLA) requests. Pakistan has processed a total of 26,630 international cooperation requests.

The FBR established a dedicated DNFBP directorate to monitor AML/CFT compliance by real estate agents and jewellers operating in the country.

The FBR undertook massive activity verifications of more than 22,000 potential DNFBPs and imposed monetary penalties worth Rs351 million on the non-compliant DNFBPs.

The FBR has completed offsite supervision of more than 1,700 DNFBPs, and in process to include real estate sector under the folds of compliance.

The SECP completed its enforcement actions on all types of legal persons and arrangements. A total of 146,697 legal persons/ legal arrangements (LPLAs) were inspected and penalties worth Rs2,388 million were imposed on con-compliant LPLAs.

The money-laundering (ML) investigations have increased to 123pc whereas as ML prosecutions have almost tripled, during the last one year.

Pakistan has provided a comprehensive outline of the ongoing terror financing (TF) and targeted financial sanctions (TFS) efforts, undertaken by the federal and provincial authorities.

Meanwhile, Pakistan Tehreek-e-Insaf Chairman Imran Khan Friday said the FATF repeatedly praised work and the political will his government had demonstrated and added they not only averted blacklisting but also completed 32 out of 34 action items. “We submitted compliance report on remaining 2 items in April based on which the FATF now declared Pakistan’s action plan completed,” he said in a series of tweets.

Imran said he was confident that prerequisite onsite visit of FATF team to confirm completed work on our action plan would pass successfully too. Hammad Azhar, members of his FATF coordination committee and officers, who worked on this task, performed exceptionally well, the whole country is proud of them.

The former prime minister explained he had constituted a FATF Coordination Committee, headed by key minister Hammad Azhar. The committee had presentations from all government departments and security agencies relevant to our FATF action plan. The officers worked day and night in the first instance to void blacklisting.

Like many other governmental organisations, the FBR has played a key role in completing the FATF actions related to DNFBPs, cash smuggling, investigating tax crimes for money laundering, and confiscating the proceeds of tax crimes. In the 34 actions of the FATF action plans, the FBR has directly dealt with at least 8 actions and spearheaded the process of implementation.

A statement, issued by the FBR on Friday, said that in order to ensure compliance with regard to DNFBPs, the Board issued AML/CFT regulations, conducted extensive outreach to educate DNFBPs, established a dedicated IT based DNFBP management system, launched customised mobile App for registrations and screening purposes, conducted a large number of onsite inspections and imposed a wide range of penalties for non-compliance.

Similarly, in the area of cash smuggling, FBR Customs has fortified cross-border controls and implemented a comprehensive mechanism to combat cash smuggling, by all means possible. Likewise, the FBR also undertook a large number of money-laundering investigations against the tax crimes and also made significant confiscations in this regard.

Asim Ahmad, Chairman FBR/ Secretary Revenue Division, felicitated all the government organisations and their key personnel, who worked tirelessly to complete the FATF actions.