FATF satisfied with bid to curb money laundering, say officials

ISLAMABAD: The Fina­ncial Action Task Force (FATF) is reported to have expressed a degree of satisfaction over Pakistan’s efforts and action plan to combat money laundering and terror financing under international obligations and indicated certain areas to do more before May this year to get out of the grey list.

A high-level delegation led by Finance Secretary Arif Ahmed Khan is currently attending a three-day conference of the FATF in Sydney, Australia. The delegation comprises representatives of the State Bank of Pakistan (SBP), National Counter Terrorism Autho­rity (Nacta), Federal Inves­tigation Agency (FIA), Federal Board of Revenue (FBR) and Financial Monitoring Unit.

“For the first time, our delegation felt that FATF is appreciating our performance so far,” a senior official told Dawn on the basis of feedback received from Sydney on the conclusion of second day of the conference. He said most of the 10-point action plan envisaging 27 benchmarks had been reviewed by the Paris-based global watchdog on anti-money laundering and terror financing. One or two relatively insignificant areas were left for Thursday when the FATF will give its final opinion.

The official said the FATF had highlighted a few matters that were doable by May but progress would need to be registered by February. He said the next review meeting of the FATF would be held in Paris in February to be followed by a broader examination of the full compliance with international commitments at another meeting in May – possibly in Sri Lanka or Sydney. The May meeting would determine whether or not Pakistan is on the course to exit from the grey list by September.

Officials said the FATF had gone through the report dispatched by Pakistan last week before the review meetings with the Pakistani delegation involving questions and answers on the performance so far and the way forward. They said the FATF team appeared convinced over the steps and measures taken by the authorities to combat terror financing and money laundering in line with the United Nations resolutions.

The Pakistani delegation explained the implementation status of the plans for various government agencies. The report identifies Pak-Afghan and Pak-Iran borders as key routes for terror financing and money laundering and says 4,643 suspected transactions relating to terror financing and money laundering have been identified and blocked since 2015, including 3,677 suspected transaction reports and 966 financial intelligence reports. A total of 1,167 transactions have been captured during 2018 alone, including 975 suspected transaction reports and 210 financial intelligence reports.

To address the challenge at the two borders, the report says, checking and security systems at Pak-Afghan border have been strengthened with improved technology and vigilance while security has also been beefed up at Pak-Iran border.

The report says the long coastal belt is also a source of smuggling and security is being tightened through law enforcement agencies, including through marine and coast guards. It says Afghan transit trade is also a source of such unregistered financial flows. All these channels are also being misused by foreign agencies to support terror-related activities.

The tools being used for financial transaction for terrorism include donations, cash smuggling, natural resources, drugs, non-governmental organisations and foreign agencies, the report says. The FBR identified about 1,185 illegal transactions since 2015, followed by 1,049 by the SBP and about 1,295 by the FIA.

During the May and September meetings, regulators and law enforcement agencies will be expected to demonstrate results in the form of investigations, prosecutions, convictions, supervisory actions, sanctions with resulting impacts on compliance by financial institutions, implementation of cross-border currency and border controls and enforcement of regulatory regime at the borders. Nacta will be expected to enhance coordination with law enforcement agencies and the Counter Terrorism Department coupled with effective implementation of sanctions under the United Nations Security Council resolutions.

In June 2018, Pakistan made a high-level political commitment to work with the FATF and APG (Asia Pacific Group on money laundering) to strengthen its anti-money laundering /counter-terror financing regime and to address its strategic counter-terrorism financing-related deficiencies by implementing a 10-point action plan to accomplish these objectives.

The successful implementation of the action plan and its physical verification by the APG will lead the FATF to clear Pakistan out of its grey list or else move into the black list by Sept.

In August, the APG as part of the pre-site mutual evaluation identified a series of deficiencies in Pakistan’s anti-money laundering/counter-terror financing laws and mechanisms.

The authorities are required to upgrade agencies and their human resources to enable them to handle foreign requests to block terror financing and freeze illegal and targeted assets. By the end of September, Pakistan has to comply with the action plan it has committed with the FATF in June to get out of the grey list or else fall into the black list.

Over the next nine months, i.e. till September, the government will complete the investigation into the widest range of terror financing activities, including appeals and calls for donations and collection of funds, besides their movements and uses