FATF starts to Clear Pakistan from Grey list

By TON Research Desk

The Financial Action Task Force (FATF) a global financial watchdog for fighting money laundering and terrorist funding on Friday declared a procedure to remove Pakistan from the “grey list” after four years of arduous monitoring of its efforts to fight terror financing, a decision that will end the danger of Islamabad being banned internationally.

At its June 2022 Session, the FATF made the primary determination that Pakistan has substantially completed its two action plans, covering 34 items,” according to a declaration issued by the FATF on Friday. An on-site review mission decision was taken by the worldwide body during its June 14-17 plenary meeting held in Berlin, Germany.

The initial determination “permits an on-site visit to confirm that the execution of Pakistan’s AML/CFT reforms has begun and is being continued and that the essential political promise remains in place to endure implementation and upgrading in the future. The FATF will continue to screen the Covid-19 condition and conduct an on-site visit at the earliest possible date, it added, without mentioning the date for the visit.

As the global body will next month send a mission to Pakistan to decide the accuracy of the government’s assertion that it has completely applied all the 34 conditions that the FATF had set in February 2018 and then in June 2021. Pakistan had been asked to implement these conditions in 15 months but it took around four years due to the intricacy of these matters.

The FATF’s conclusion will now need promises from all the Pakistani stakeholders to show to the FATF’s future mission that no grave deficiency remains in its Anti-Money Laundering (AML) and Combating Terror Financing (CFT) regimes.

The FATF also observed Islamabad’s continued political commitment to combating both terrorist financing and money laundering has led to significant progress since June 2018, when Pakistan prepared a high-level governmental pledge to work with the FATF and Asia Pacific Group to strengthen its AML/CFT regime to address its strategic counter-terrorist financing-related deficiencies.

In specific, Pakistan made terror funding inquiries and trials against the senior leaders and commanders of UN-designated terrorist groups and there is a positive upwards trend in the number of money laundering investigations and prosecutions being pursued in Pakistan, in line with Pakistan’s risk profile.

Furthermore, Pakistan also mainly implemented its 2021 action plan before the set times, according to the FATF. The Pakistani officials said that Pakistan will present its development report in the first week of July to the FATF. The FATF team will then make on-site visits to Pakistan in the last week of July and hold meetings with related government departments.

The on-site inspection team will submit its report to the FATF and on the basis of the on-site team report, the FATF will announce the decision of keeping or removing Pakistan from the grey list in the next plenary. In February 2018, the FATF had decided to place Pakistan on the grey list with effect from June 2018 and handed it over a list of 27 conditions that it needed to implement to exit the grey list. In the last plenary meeting, the FATF also acknowledged the “significant progress” made by Pakistan in completing the required action items.

Earlier, Pakistan had completed 26 of the 27 action items in its 2018 action plan and one remaining point was about CFT-related item by demonstrating that terror financing investigations and prosecutions target senior leaders and commanders of UN-designated terrorist groups. The remaining action item was the most significant among all in the view of the member countries including the US and India, which have circled Pakistan through the FATF platform.

As the FATF forum demanded that Pakistan should take action against eight groups the Afghan Taliban, Jamaat-ud-Dawa (JuD), Haqqani Network, Jaish-e-Mohammed (JeM), Lashkar-e-Taiba (LeT), Falah-e-Insaniyat Foundation, al-Qaeda and the Islamic State.

In reply to extra shortages later identified in Pakistan’s 2019 APG Mutual Evaluation Report (MER), in June 2021, Pakistan delivered an additional high-level commitment to overcome these strategic deficits pursuant to a new action plan that chiefly concentrated on battling money laundering. The FATF had given a new six-point action plan in June last year, keeping Islamabad vulnerable to worldwide pressure maneuvers.

Previously, Pakistan was asked to endure to work to address its strategically important AML/CFT shortages by augmenting international cooperation by amending the Mutual Legal Assistance law and that it was seeking assistance from foreign countries in implementing UNSCR 1373 designations.

As the supervisors were conducting both on-site and off-site supervision equal with specific risks related with designated non-financial businesses and persons (DNFBPs), including applying suitable prohibitions where necessary.

The Financial Action Task Force (FATF) jointly cleared Pakistan on several of its action plan checks. This is the start of the process of Pakistan being detached from the grey list. A technical assessment team will be sent to Pakistan to finish their work before October 2022 preliminary cycle.

It is indeed a triumph for Pakistan and the hard work of the government of Pakistan must be appreciated in this regard. However, it requires more efforts to be fully cleared from the “FATF grey list” on a permanent basis.

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