FATF hanging sword

Briefing media in Washington, Foreign Minister Shah Mehmood Quershi sought the support of United States to get Pakistan off the Financial Action Task Force (FATF) greylist. The meeting of this global monitoring body on money laundering and terrorism financing is scheduled to be held in Beijing next month. It will be followed by a plenary session of FATF in Paris in April, which will deliberate over Pakistan’s progress on the compliance of 27 point action plan and the additional recommendations provided to it after a number of scrutinies’ and midterm evaluations made by the Asia Pacific Group (APG), a regional FATF styled body. The plenary meeting will decide as to whether Pakistan will remain on the greylist of countries with weak anti-money laundering and counter terrorism financing regimes or be taken off this list.

After putting Pakistan on greylist in June, 2018 in FATF plenary meeting, several APG scrutiny meetings have been held on Pakistan’s tangible progress for effectively controlling money laundering and terrorism financing and mutual evaluation reports released with handing over more and more recommendations to remove the existing loopholes in the administrative, legal and financial frameworks for combating the twin menace. It merits mention that on the second scrutiny report of its regional affiliate body, FATF extended greylist period of Pakistan up to February 2020. In that report it was mentioned that Pakistan did not comply on 4 out of 40 recommendation handed over to it after the first scrutiny. The APG, in its midterm review which was released in October last year, noted full compliance on  8 point out of 27 points action plan, partial compliance on some points and lack of compliance on others. After the last FATF plenary session, more recommendations were provided for strict compliance, if Pakistan wants exit from the greylist. It remains to be seen after the Beijing meeting how for progress has been made on these additional recommendations. 

At the October, 2019 plenary, the present government had reiterated its political commitment for total compliance on all 27 points of FATF action plan for making robust its regimes of anti-money laundering and counter terrorism financing. It was committed that strong action shall be taken against money laundering and terror financing violations; mechanism of close cooperation shall be put in place among the government authorities for combating these evils; effective control of currency smuggling shall be ensured; capacity building of law enforcing agencies for identifying and investigating the persons and entities involved in money laundering and terror financing shall be done; assurance of result effective prosecution by enhancing capacity building of prosecutors dealing with money laundering and terror financing matters and support to judiciary; and implementation of financial sanctions against the persons and entities involved in money laundering and terror financing as envisaged in the provisions of UN Security resolutions numbering 1267 and 1373. The outcome of Beijing meeting next month may reveal the success story of the commitments made for completing the process of implementation of FATF action plan.

The US has already shown its stance which is necessary for the removal of Pakistan from greylist. In a tweet in October last year, Ms Alice Wells Assistant Secretary of State for South Asia had expressed partial satisfaction on the measures taken for the seizure of assets of banned organisation and arrest of Lashar-e-Tayyabia leasrs and Jumattu Dawa Chief Hafiz Saeed, demanding for their trials and convictions.

If FATF decides in April plenary decides to retain Pakistan on greylist it will bring serious economic implications. It will tighten risk profile of the country, making it difficult for foreign financial institutions to do transactions with local banks. It may hinder loan disbursements from international donor agencies. The resident representative of IMF Tersa Daban Sanchez had cautioned in seminar in Islamabad on 7th October last against the greylist impact on the current Extended Fund Facility of $ 6 billion. Hopefully, the administrative and legal measures taken so for will be instrumental for getting Pakistan off the greylist.