Holding Pakistan on a pedestal
It appears that Financial Action Task Force (FATF) is showing no leniency to the government of Pakistan to put in place an effective administrative and legal framework for curbing anti money laundering and strengthening the counter terrorism regime. The first review to monitor its compliance with counter terror financing and money laundering action plan has not gone well. A second review meeting will be held next month.
A six member delegation of Asia Pacific Group (APG) has found some deficiencies in Pakistan’s system, agencies and law to meet the obligations against money laundering and terror financing, but noted the progress was taking place. The delegation pointed out deficiencies in legal system governing non profit and charitable organisations, transparency in beneficial ownership regime and counter terror financing mechanism to handle suspicious transaction reports. The APG will submit its report to Paris based FATF.
It is noteworthy that APG delegation told Pakistani authorities that legal framework covering the non profit able charitable organisations is seriously deficient and vulnerable to leaks and misuse, while benami ownership regime is still wide spread. The latter part pertains to the financial crimes committed by the West European countries, including the US and UK favoured political elite who own billions of dollars, Euros and Pound Sterling worth offshore assets. It were they who did not want to pass legislations and codify laws to streamline anti-money laundering and counter terrorism regimes during the past 10 years. They even pressurized and used the banking system for money laundering; took away the autonomy of State Bank of Pakistan to take appropriate action, and even manipulated the working of Security Exchange Commission of Pakistan. Former disqualified Prime Minster is showing obduracy about the benami ownership of his offshore assets even after the Supreme Court historic verdict of 28th July 2017 in Panama Papers case. Former President Asif Zardari is not cooperating with Federal Investigation Agency in probe initiated against him in Rs. 36 billion money laundering, through banking channels by way fake accounts.
It was also noted that Financial Monetary Unit (FMU) of National Counter Terrorism Authority ((NACTA ) and provincial agencies like police require a lot of training and preparedness to combat money laundering and terror financing to the satisfaction of FATF under a 10 points action plan committed by Pakistan. The commitment was made during the interim government. The newly elected government will be able to honour this commitment on time. The un- parliamentary and vested interest hostage behavior of the major opposition parties will thwart the process of necessary legislations to meet the tough FATF deadline.
In the next review meeting in September APG will engage the PTI led coalition government in the center as well as provincial governments to fast track the implementation of the plan. This would be followed by yet another visit by the APG in October. Pressing a newly elected government before it completely settles down to run the affairs of state is nothing but holding its legs to a blazing fire, which is not justified. That is why the interim finance minister, Dr. Shamshad Akhtar urged the APG in a meeting on Friday to be flexible in its deadline given to Pakistan to address the legal and administrative difficulties in anti-money laundering and counter terror financing.
The delegation told the authorities to upgrade agencies and their human resource to be able to handle foreign requests to block terror financing and freeze illegal and targeted assets. It also advised strengthening of mutual legal assistance laws for extradition of those involved in terror financing on request from FATF.
Changes in the legal framework to combat anti-money laundering and terror financing require legislative changes, tackling vast deficiencies in the economy such as prevalence of black market will be a difficult part. Addressing the black economy is key to tackling terror financing since the relationship between terrorism and racketeering is well entrenched. A comprehensive legislation will be needed to remove the deficiencies in legal frame work and the government may find it difficult to smoothly pass it from both the houses of the parliament because it may not muster the required majority vote. Capacity building of FMU of NACTA FIA and provincial police will require more financial resources. The allocations made for Counter Terrorism Watchdog in the current fiscal year budget are just peanuts.