Pakistan aims to exit FATF grey list by June

Islamabad: Pakistani officials say that the country is committed to compliance with the Financial Action Task Force (FATF) standards after the watchdog announced to keep Pakistan on its grey list for another four months.

Pakistan has completed almost 90 per cent of its current FATF action plan with 24 out of 27 items rated as ‘largely addressed’ and remaining 3 items ‘partially addressed’, said Minister for Industries Hammad Azhar. Pakistan’s high-level political commitment since 2018 that led to significant progress has also been acknowledged by the global illicit financing watchdog, he stated.

Speaking at a press conference in Islamabad on Friday, Hammad Azhar said that Pakistan is perhaps subjected to the most challenging and comprehensive action plan by FATF.

“We are also subject to dual evaluation processes of FATF with differing timelines”. However, “Pakistan remains committed to complying with both FATF evaluation processes” and the remaining three points on the FATF’s action plan would be accomplished soon, he declared.

Action plan

He also commended the hard work by multiple federal and provincial departments to comply with the FATF requirements “despite a very tough action plan, tight timelines, and the challenges posed by the COVID-19 pandemic.”

Hammad Azhar, who is the chairman of the FATF Coordination Committee, said Pakistan’s target now is to complete the 27-point action plan to improve its economic indicators and send a clear message to the world that Pakistan’s financial systems secure. Responding to speculations about downgrading to black list, the minister said that “blacklisting was not an option because the country has achieved significant progress” by choking money laundering and terror financing.

The Paris-based organization that monitors terrorism funding said on February 25 that Pakistan will continue to be on its watch list until June for three out of 27 unmet action plan despite the country’s progress. Pakistan has been strongly urged to complete its full action plan targets on anti-money laundering and combating financing terror (AML/CFT) before June 2021.

The FATF has asked Pakistan to continue to work on implementing these three remaining items:

1. Demonstrating that terrorism financing (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.

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.

Significant progress

The FATF President Dr Marcus Pleyer appreciated that the country had made significant progress. “Pakistan has made progress across all action plan items and has now largely addressed 24 of the 27 action items” since June 2018 with a high-level political commitment to work with the FATF and APG to strengthen its AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies.

Being in the FATF list means the country will face enhanced monitoring procedures. While there are no direct economic consequences but the listing impacts the country’s ability to attract foreign investment as well as the country’s imports, exports, remittances and access to international lenders.

FATF kept North Korea and Iran as the only two countries on its black list but added four new places to the grey list including Morocco, Burkina Faso, Senegal and the Cayman Islands.

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