To implement the action plan of Financial Action Task Force (FATF) for curbing money laundering and terror financing, the State Bank of Pakistan (SBP) has begun a crackdown against criminals working in the formal payment system at financial institutions including conventional and branchless banking systems to mitigate the risks of terror financing and money laundering. But the question is why these actions were not taken when Pakistan was put on the grey-list six years ago for the first time when tight prudential regulations were already in place? Why the SBP remained silent spectator on the opening of thousand of fake bank accounts which were being used for money laundering by the political and business elite?
Targeting the ongoing accountability process, ANP Central President Asfandiyar Wali said that why the PTI government is silent about FATF deadline which will expire in September next year. One may think it is the case of pot calling the kettle black. Pakistan was first grey-listed on the charges of money laundering and terror financing in 2012 when ANP was a coalition partner with the PPP in governments of KPK and in the center. Later it was removed from the grey-list in 2015.It was also allied with PML-N in 2017 when FATF cautioned the federal government to remove the lacunae in its anti-money laundering and counter terrorism regimes. The required legislations were not done and procedural requirement were not improved despite the two third majorities in the parliament till the end of the tenure of government on 31 May 2018 and Pakistan was put back on the grey-list.
The PTI government is serious about implementing the FATF action plan about anti-money laundering and curbing terror financing but it lacks the required majority of lawmakers in the parliament to make the necessary legislation. Hence, regulatory measures are taken to meet the FATF demands. Grey-listing of Pakistan is a matter of the prestige and international image of the country and the opposition parities should strengthen the hands of the government in making legislations to straighten up the anti money laundering and counter terrorism financing regimes.
The central bank has issued a notification emphasising that it is imperative that any person(s) linked to any criminal activity or affiliated to any terrorist organisation shall not become a part of financial institution as well as payment system operators and payment service providers. The central bank has asked 25 questions from all people serving in any capacity in payment system to check whether they have criminal record or have conflict of interest in the payment system. The question include whether they have remained associated with banned organisations, faced any criminal charges, held dual nationalities, defaulted on tax payments, served at exchange companies and possessed memberships of stock markets. These individuals have to answer the questions in yes or no. If the answer comes in affirmative, then respondents have to give details in writing.
Earlier authorities discovered numerous bank accounts which were suspected to having been used for money laundering amounting to billion of rupees. When asked in a press conference, former President Asif Zardari proudly and arrogantly replied that businessmen open such accounts. The authorities have already taken a couple people of people into custody associated with fake accounts. The new instrument from SBP came after the recent warning from the Asia Pacific Group (APG), a subsidiary of Financial Action Task Force that Pakistan fully did not comply with 33 out of 40 regulations for improving the payment system.
The APG team had not been impressed by the progress made so far in curbing money laundering and terror financing and had asked to do more so that it may get out of the grey-list of Paris based Financial Action Task Force. Apparently, the group found institutional framework weak. The delegation had feared that the set up installed for scrutinizing the activities of non-profit organisations, brokerage houses, exchange companies and donations of corporate entities—registered under companies act—was not robust enough.
The APG had believed that even areas where legal framework appeared vigorous, the implementation mechanism was not geared up to track down the financial flows of enteritis in question, because the agencies involved were not connected. The provisions of UN Security Resolutions 1267 and 1373 are binding on all member countries and the leadership of all political parties should refrain from point scoring or pulling the legs of incumbent government. They should realise that non-compliance of the agreed FATF action plan may push the country to the black-list, further compounding its economic woes.