The Financial Action Task Force (FATF)dominated by Indian Lobby has decided to keep Pakistan on its 'grey list', with the country's status set to be reviewed next in June 2021.
The announcement was made by FATF President Dr Marcus Pleyer at a press briefing on the outcomes of the FATF's four-day virtual plenary meeting.
"Pakistan remains under increased monitoring," Pleyer said, adding that while the FATF recognised the "significant progress" made by Pakistan, "some serious deficiencies remain".
"All of these areas relate to terror financing; three out of 27 [points] need to be fully addressed," he added, referring to the action plan agreed to by Pakistan.
While reiterating that Pakistan has made "progress", the FATF president said: "[We] strongly urge completion of the plan [by Pakistan]."
He said Pakistan "must improve their investigations and prosecutions of all groups and entities financing terrorists and their associates and show [that] penalties by courts are effective. As soon as Pakistan shows it has completed these items, FATF will verify and members of FATF will vote."
Responding to a question by an Indian journalist about prosecution of terrorists in Pakistan, Pleyer clarified that the FATF was not an investigative organisation. "What we assess is the entire system of anti-money laundering [and] the framework. This does not change with incidents per se," he said."What is now essential is that Pakistan completes the action plan."
The FATF president noted that Pakistan was working towards its commitment made at a high level to implement the illicit financing watchdog's recommendations, saying "that is not the time to put a country on the blacklist".
He added that as soon as Pakistan completed the action, the watchdog "will verify the sustainability of the reforms and discuss in next plenary in June".
Ahead of the plenary which began on Monday, the FATF had updated the overall performance of all countries.
Based on this update, Pakistan has been shown improving compliance on two out of 40 recommendations of the FATF on effectiveness of anti-money laundering and combating financing terror (AML/CFT) systems.
It found Pakistan’s progress non-compliant on four counts, partially compliant on 25 counts and largely compliant on nine recommendations. Pakistan’s evaluation at the plenary will be based on the 27-point action plan and not on these 40 recommendations.
Diplomats said they had not seen this time the kind of aggressive diplomatic effort Islamabad had been making in the past, particularly before the October 2020 plenary review. They said the plenary could discuss all options, including blacklisting Pakistan, keeping it in the grey list or removing it from the grey list.
There are, however, no chances that Pakistan could be put in the blacklist because it has at least three members of the FATF — China, Turkey and Malaysia — who can sustain all pressures against any downgrade.
This is not only based on friendly bilateral relations but performance as well. “From our perspective, we have completed all action points and complied with what the country was required to do, but sometimes some influential members can raise objections on a point that one can think is not justified,” said an official.
Pakistan fully complied with 21 out of 27-point action plan last year, leading the FATF to soften its stance from previously aggressive threats and yet it kept it in the grey list in October last year. Following robust progress on anti-money laundering and terror financing laws, rules, regulations and updating inter-agency and inter-provincial cooperation, the FATF narrative shifted towards Islamabad to “demonstrate” seriousness on ground through results and prosecutions.
In October last year, the FATF had announced that Pakistan had made progress across all action plan items and “largely addressed 21 of the 27 action items”. As all action plan deadlines stood expired, the FATF had said it strongly urged Pakistan to swiftly complete its full action plan by February 2021 appreciating that it took “note of the significant progress made on a number of action plan items”.
It had asked Pakistan to continue to work on implementing its action plan to address its strategic deficiencies by “demonstrating” that law enforcement agencies are identifying and investigating the widest range of terror financing (TF) activity and that TF investigations and prosecutions target designated persons and entities, and those acting on behalf or at the direction of the designated persons or entities.
Secondly, it was required to “demonstrate” that TF prosecutions result in effective, proportionate and dissuasive sanctions and thirdly to “demonstrate” effective implementation of targeted financial sanctions against all 1,267 and 1,373 designated terrorists and those acting for or on their behalf, preventing the raising and moving of funds, including in relation to non-profit organisations (NPOs), identifying and freezing movable and immovable assets and prohibiting access to funds and financial services.
Fourth and finally, it had asked Islamabad to “demonstrate” enforcement against terror financing sanctions (TFS) violations, including in relation to NPOs, of administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases.
The Foreign Office spokesman had said last week that Pakistan had made substantive progress on the remaining six items of the FATF action plan and was duly acknowledged by the wider FATF membership.
Pakistan has been on the FATF’s grey list for deficiencies in its counter-terror financing and anti-money laundering regimes since June 2018.
Until the last assessment, Pakistan was found deficient in acting against the organisations allegedly linked to the terror groups listed by the UN Security Council, prosecuting and convicting banned individuals and tackling smuggling of narcotics and precious stones.
Recently, the authorities had taken further steps including the prosecution of Lashkar-e-Taiba chief Hafiz Saeed and his associates in terror financing cases.
The Foreign Office on Friday said that Pakistan had made substantive progress on the remaining items of the Financial Action Task Force’s (FATF) Action Plan.
“FATF had assessed Pakistan to have completed 21 of the 27 Action Items under the current Action Plan. In the remaining six partially addressed items, significant progress has been made by Pakistan, which is duly acknowledged by the wider FATF membership,” Foreign Office Spokesman Zahid Hafeez Chaudhri said at the weekly media briefing.
Pakistan, he said, remained committed to completing the implementation of the FATF Action Plan.
