Blessing in disguise

Financial Action Task Force (FATF) has postponed review of Pakistan’s performance report till October, regarding action on the remaining 13 points of action plan to make robust its anti-money laundering (AML) and counterterrorism financing regimes (CTF). The review was scheduled for June 21-26 for which performance report has to be submitted by April 20. Now it will be sent in August for review by the FATF in October. Granting unexpected leash of five months seems to have been necessitated by the global coronavirus pandemic and the watchdog decided to give more time to Pakistan to remove the existing deficiencies in its AML and CTF regimes.

In its earlier review of the performance report, the Paris based global watchdog gave Pakistan four months to show total compliance on all 27 points of the action plan for effectively curbing money laundering and terror financing. The required action had been completed on 14 points till February but it was missed on 13 targets. FATF had urged Pakistan for total compliance on all points in its meeting on February 21, failing which the country shall be moved to blacklist.

Pakistan would have not been placed on the greylist for the second time, had last PML-N government taken FATF warning of February, 2017, assuring serious consideration of the expected action plan as and when received. On the contrary former Interior Minister Ahsan Iqbal described it a conspiracy to halt progress of what he called booming economy of Pakistan. Former Finance Minister, Miftah Ismael made a tall claim, saying that country’s AML and CTF regimes are very strong and foolproof.

In the previous review, eight supplementary points had been given, stressing effective and coordinated actions by the concerned authorities against money laundering and terror financing; concrete investigation against the designated persons and entities believed to be involved in terrorism financing; result oriented prosecution against such designated persons and entities; and effective implementation of targeted financial sanctions, buttressed by comprehensive legal obligations, against all designated persons and entities that fall within the purview of sanctions included in the United Nations Security Council Resolutions numbering 1267 and 1373.

In the reaming points, some lay more emphasis on the comprehensive prosecution and penalizing terrorists’ networks. It requires comprehensive legislation to strengthen the institutional and legal frameworks and reforming criminal justice system. The razor thin majority of the government in the National Assembly, minority numerical strength in Senate of the ruling party, and flourishing culture of political expediency in its rank and file make the passage and enforcement of required legislation a difficult task as  despite known intention necessary amendment has not been made in the Protection of Economic Reforms Act of July, 1992, a law on the statute book that dilutes the regulatory powers of the central bank regarding transfer of money through foreign currency accounts. The recent amendment in the NAB Ordinance has encouraged money launderers and corrupt elements to file applications for relief from courts.  About 100 applications have been sent to NAB. Anwer Majeed of Omni Group wants the mega money laundering case to be transferred from NAB court to banking court.

The PTI led coalition government needs unflinching parliamentary support from both its coalition partners and opposition, and of course firm resolve by leadership of ruling party as well, to do necessary legislation, enabling the government move swiftly towards the complete implementation of FATF Action Plan which is necessary for getting the country off greylist. They should understand the bitter reality that being on greylist would tighten risk profile of Pakistan and international financial institutions may shy away from providing financial assistance to it. Speaking at seminar in Islamabad in August last year, IMF country representative Teresa Daban Sanchez had cautioned that remaining on greylist may hinder smooth implantation of global lender’s $6 billion bailout package besides inflow of capital from other sources. It may also make difficult raising loans from the private capital market through sale of investment bonds.

Proper attention is needed to strengthen the institutions mandated with curbing money laundering and terrorism financing. Neither the previous government nor the present really wanted to strengthen National Counter Terrorism Authority (NACTA) in terms of financial resources, human resource and equipment. Hopefully, all required actions shall be taken for the total implementation of FATF Action plan.

There is no iota of doubt that FATF is acting like personal bodyguard for loan sharks such as IMF and the WB. Major stake holders in the global watchdog on money laundering and terror financing are themselves encouraging money laundering and providing safe heaven to the money launderers’ like the absconding former finance Minister of Pakistan Ishaq Dar among others.