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FATF formally places Pakistan on grey list

The Financial Action Task Force (FATF) on Friday formally placed Pakistan on the grey list due to ‘strategic deficiencies’ in its anti-money laundering and terrorism financing regime.

The decision came despite Islamabad showing progress in the majority of areas identified as threat the international terror financing watchdog.

The highly anticipated decision was taken by the FATF Plenary that met in Paris from June 24 to 29. The global body took the decision on the basis of a monitoring report of the International Cooperation Review Group (ICRG).

Pakistan has been placed among the jurisdictions (states) with strategic deficiencies Ethiopia, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen.

The FATF called on all those jurisdictions to complete implementation of the action plans expeditiously and within the proposed timeframes, vowing to closely monitor the implementation of those action plans.

However, the ICRG report showed that Pakistan did show progress on three out of four major areas of concerns. Cross-border smuggling of cash was the only major area where Pakistan admitted deficiencies.

Finance Minister Dr Shamshad Akhtar represented Pakistan at the meeting. Pakistani authorities refuted the allegation of lax supervision of the financial sector, terming it unjustified.

The FATF and the ICRG were informed that Pakistan had already asked banks to drop the ‘good guy’ list.

“Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies,” according to the announcement.

Action Plan

The statement added that Pakistan will work to implement its action plan to accomplish these objectives by demonstrating that terrorism financing risks are properly identified, assessed, and that supervision is applied on a risk-sensitive basis.

The FATF said Pakistan will also be demonstrating that remedial actions and sanctions are applied in cases of AML/CFT violations, and that these actions have an effect on AML/CFT compliance by financial institutions.

“It will be demonstrating that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services.”

The country will also demonstrate that authorities are identifying cash couriers and enforcing controls on illicit movement of currency and understanding the risk of cash couriers being used for terrorism financing.

Also, Pakistan will improve inter-agency coordination between provincial and federal authorities to combat terror financing risks. It will demonstrate that law-enforcement agencies (LEAs) are identifying and investigating the widest range of terrorism financing activity and that terrorism financing investigations and prosecutions target designated persons and entities, and persons and entities acting on behalf or at the direction of the designated persons or entities.

Pakistan will also demonstrating that terrorism financing prosecutions result in effective, proportionate and dissuasive sanctions and enhancing the capacity and support for prosecutors and the judiciary.

It will also demonstrate enforcement against TFS violations. Pakistan will demonstrate that facilities and services owned or controlled by designated persons are deprived of their resources and the usage of the resources.


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