Pakistan is likely to remain on the grey list of global money laundering and terrorist financing watchdog FATF until June for failing to meet some of the targets under the additional criteria, according to a media report on Friday.
Pakistan has been on the grey list of the Paris-based Financial Action Task Force (FATF) since June 2018 for failing to check money laundering, leading to terror financing, and was given a plan of action to complete it by October 2019. Since then, the country continues to be on that list due to its failure to comply with the FATF mandates.
The concluding session of the plenary meeting of the FATF is due on Friday and includes Pakistan’s review on the agenda, the Dawn newspaper reported. Pakistan is now targeting the full completion of the 2021 action plan on anti-money laundering and combating terror financing by the end of January 2023.
In October 2021, the FATF acknowledged Pakistan’s progress on a 27-point action plan on completion of 26 items but kept the country on its “increased monitoring list” to exhibit terror financing investigations against and prosecutions of top cadres of UN-designated terror groups. At the time, FATF President Marcus Pleyer said Pakistan had to complete two concurrent action plans with a total of 34 items.
“It has now addressed or largely addressed 30 of the items,” the report quoted him as saying. The most recent action plan of 2021 on money laundering from FATF’s regional affiliate — the Asia Pacific Group (APG) — largely focused on money laundering and had found serious deficiencies.
In this new action plan, four out of the seven items now stood addressed or largely addressed, the report said.
In October, FATF encouraged Pakistan to continue to make progress in addressing the one remaining CFT-related item as soon as possible by continuing to demonstrate that terror financing investigations and prosecutions target senior leaders and commanders of UN-designated terrorist groups, it said. Recently, the International Monetary Fund (IMF) asked Pakistan to complete the last remaining item in the 2018 anti-money laundering and counter-terrorist financing (AML/CFT) action plan on the effectiveness of terror financing investigations and prosecutions of senior leaders of UN-designated terrorist groups.
It asked Pakistan to promptly address the deficiencies identified in Pakistan’s Asia Pacific Group on Money Laundering Mutual Evaluation Report under the 2021 AML/CFT action plan, the report said. The government has given a commitment to the IMF to review the implementation of AML/CFT controls by financial institutions by the end of June with respect to the tax amnesty programme for the construction sector, the report said.
It 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”, it said. With Pakistan's continuation on the grey list, it is increasingly becoming difficult for Islamabad to get financial aid from the IMF, the World Bank, the Asian Development Bank (ADB) and the European Union, thus further enhancing problems for the country.
Pakistan has so far avoided being on the black list with the help of close allies like China, Turkey and Malaysia. The FATF is an inter-governmental body established in 1989 to combat money laundering, terrorist financing and other related threats to the integrity of the international financial system. The FATF currently has 39 members including two regional organisations -- the European Commission and Gulf Cooperation Council. India is a member of the FATF consultations and its Asia Pacific Group.
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