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FATF Pak Likely to Get Another Reprieve

Published Jan 22, 2020
Updated Mar 02, 2020

Almost a year after the Financial Action Task Force (FATF) passed stringent strictures against Pakistan for not demonstrating,“proper understanding of the TF risks posed by Da’esh, AQ, JuD, FiF, LeT, JeM, HQN, and persons affiliated with the Taliban,” progress achieved by the country to satisfy the objections posed by the FATF may be limited.

Yet all indications are that the FATF may let Pakistan off the hook again given support of members of the core group including this time the United States.

In fact this is the demand that Pakistan has made to the US and is likely to be reiterated during the visit of the US top state department official in the region.

Foreign Minister Shah Mehmood Qureshi at a media briefing in Washington said that Pakistan hoped the US would back its efforts to get it off the list at the FATF’s Beijing meeting. Pakistan is likely to use the US talks with the Taliban as a card to seek assistance from Washington to remain out of the grey list.

A similar demand may have been made by the Prime Minister Imran Khan during his meeting with the US President Donald Trump in Davos.

The observations of the FATF on 23 February 2019 are appended below:-

Pakistan should continue to work on implementing its action plan to address its strategic deficiencies, including by:

(1) adequately demonstrating its proper understanding of the TF risks posed by the terrorist groups above, and conducting supervision on a risk-sensitive basis;

(2) demonstrating that remedial actions and sanctions are applied in cases of AML/CFT violations, and that these actions have an effect on AML/CFT compliance by financial institutions;

(3) demonstrating that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS);

(4) demonstrating that authorities are identifying cash couriers and enforcing controls on illicit movement of currency and understanding the risk of cash couriers being used for TF;

(5) improving inter-agency coordination including between provincial and federal authorities on combating TF risks;

(6) demonstrating that law enforcement agencies (LEAs) are identifying and investigating the widest range of TF activity and that TF investigations and prosecutions target designated persons and entities, and persons and entities acting on behalf or at the direction of the designated persons or entities;

(7) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions and enhancing the capacity and support for prosecutors and the judiciary; and

(8) demonstrating effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all 1267 and 1373 designated terrorists and those acting for or on their behalf, including preventing the raising and moving of funds, identifying and freezing assets (movable and immovable), and prohibiting access to funds and financial services;

(9) demonstrating enforcement against TFS violations including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases;

(10) demonstrating that facilities and services owned or controlled by designated person are deprived of their resources and the usage of the resources. Given the limited progress on action plan items due in January 2019, the FATF urges Pakistan to swiftly complete its action plan, particularly those with timelines of May 2019.