The Financial Action Task Force (FATF) on Friday warned Pakistan it faced the possibility of being added to the watchdog’s “black list” and face greater scrutiny of all transactions in its financial system if it fails to fully implement an action plan to counter terror financing by June.
A statement issued by the multilateral watchdog’s president, Xiangmin Liu of China, at the conclusion of the FATF’s plenary meeting in Paris noted that all deadlines for the 27-point action plan had expired and expressed concerns at Pakistan’s failure to implement the plan according to agreed timelines.
The FATF, which has been repeatedly assessing Pakistan’s efforts to implement the action plan since the country was placed on the watchdog’s “grey list” in June 2018, said Islamabad has “largely addressed” only 14 of the 27 action items, with “varying levels of progress” on the rest of the plan.
“All deadlines in the action plan have expired. While noting recent and notable improvements, the FATF again expresses concerns given Pakistan’s failure to complete its action plan in line with the agreed timelines and in light of the [terror financing] risks emanating from the jurisdiction,” the statement said.
It added: “The FATF strongly urges Pakistan to swiftly complete its full action plan by June 2020.
“Otherwise, should significant and sustainable progress especially in prosecuting and penalising [terror financing] not be made by the next Plenary, the FATF will take action, which could include the FATF calling on its members and urging all jurisdiction to advise their [financial institutions] to give special attention to business relations and transactions with Pakistan.”
The reference to a “call to action” for countries to apply counter measures to protect the global financial system from money laundering and terror financing risks is the equivalent of being placed in the “black list”, which now has only Iran and North Korea.
The FATF listed eight specific areas that Pakistan should focus on while implementing its action plan to address “strategic deficiencies”, including “effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all [UN Security Council Resolution] 1267 and 1373 designated terrorists and those acting for or on their behalf, including preventing the raising and moving of funds, identifying and freezing assets (movable and immovable), and prohibiting access to funds and financial services”.
Among the UN-designated terrorists active on Pakistani soil are Lashkar-e-Taiba founder Hafiz Saeed, who was given a five-and-a-half year prison term in two terror financing cases four days before the FATF meetings began in Paris, Jaish-e-Mohammed chief Masood Azhar and mob boss Dawood Ibrahim.
Also among the eights areas listed by the FATF are “enforcement against TFS violations including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases”; ensuring that facilities and services owned by designated person are deprived of resources; application of remedial actions and sanctions in terror financing and money laundering violations; demonstrating that competent authorities are cooperating and taking action against illegal money or value transfer services; demonstrating the implementation of cross-border currency and BNI controls at all ports of entry; demonstrating that law enforcement agencies are identifying and investigating the widest range of terror financing activity and that investigations and prosecutions target designated persons and entities; and demonstrating that prosecutions result in “effective, proportionate and dissuasive sanctions”.
The statement listed “risk-based supervision and pursuing domestic and international cooperation to identify cash couriers” among the areas where Pakistan has made progress.
Unlike the reports issued after plenary meetings during the US presidency of the FATF, which named terror groups such as LeT, JeM, Haqqani Network, Tehrik-e-Taliban Pakistan, Islamic State and al-Qaeda, the latest report didn’t go into specifics.
There was no immediate response to the FATF report from Indian officials.
A person familiar with developments, who declined to be named, said Indian authorities would be satisfied with Pakistan’s retention on the grey list as it meant the country hadn’t been let off.
The person added: “Pakistan is under considerable pressure to perform with regard to the FATF’s parameters. Black-listing is always there, but keep in mind that the moment you black list a country, it is beyond the pale. As long as they’re grey listed, they’re still on the hook.”