FATF heat up
FATF heat up
Editorial
Editorial

Pakistani delegation returns from Orlando after the Financial Action Task Force (FATF) meetings, they will bring with them a heavy agenda of tasks for the government to execute. The country has been granted two more months to complete compliance with its own action plan submitted to FATF last year and the next review is scheduled for September.

Pakistani delegation returns from Orlando after the Financial Action Task Force (FATF) meetings, they will bring with them a heavy agenda of tasks for the government to execute. The country has been granted two more months to complete compliance with its own action plan submitted to FATF last year and the next review is scheduled for September.

It is hard to believe that the state has been unable to meet the demands of the Financial Action Task Force yet another time. Though it has dodged the penalty of being on FATF blacklist and bought time till October, the failure to come up to the watchdog’s terms is not a good sign.

The sword of Damocles still hangs, and Pakistan has to ensure compliance with the FATF action plan to counter money laundering and terror financing by October 2019.

According to government officials sources, a multiagency effort will have to be launched to complete compliance with the action. Key areas of focus will be the Terror Financing Risk Assessment by National Counter Terrorism Authority (Nacta), Sectoral Risk Assessment of Cash Smuggling by the Federal Board of Revenue with interagency coordination to be provided by Nacta.

“Investigations, prosecution and convictions by our law enforcement agencies will be required” says one official with deep familiarity of the action plan and where compliance is being sought. “The Federal Investigation Agency and Counter Terrorism Departments (CTD) of the police forces will have to take ownership here.” Action is also being sought against illegal Money and Value Transfer Services, such as Hawala and Hundi, by FIA in coordination with State Bank of Pakistan (SBP), along with a set of supervisory actions by regulators, freezing of assets of individuals and entities designated by the United Nations as terrorists. On top of this, a strategy to manage these assets by authorities will need to be demonstrated.

The Past governments have struggled to get this level of coordination, which is essential in producing results on the ground. One of the items mentioned in the list of actions required by FATF is “improving inter-agency coordination including between provincial and federal authorities,” in combating terror financing risks.

The interest is the action required against “designated persons and entities”, including demonstrating that “law enforcement agencies are identifying and investigating the widest range” of terror-financing activity. After this, FATF has also asked for prosecution targeting designated persons and entities and those acting on their behalf. After that, FATF also wants to see that these “prosecutions result in effective, proportionate and dissuasive sanctions.” The focus is now on far-reaching actions.

The Pakistani delegation to FATF meetings consisted of the DG Financial Monitoring Unit and the DG Ministry of Foreign Affairs.

On the contrary, even though Pakistan has, in recent months, taken several major steps in line with the FATF action plan like proscribing several militant groups and seizing their assets as well as ensuring that foreign currency transactions in the country are not left undocumented it has been told to ‘do more’ and ensure there is no room for money laundering and terror financing.

That Pakistan’s FATF woes are far more political than financial in nature is pretty evident. It is one of the several ways for the world powers to keep Pakistan under pressure in pursuit of their diplomatic goals. Well aware of the thickening global plot, Pakistan needs to move on with all the care and caution.

Pakistan needs more supporters to beat the blacklist. That is likely to happen when our actions speak louder than our briefings. In October, Pakistan will again brief the FATF about its progress on the action plan. Being on the grey list has its problems. The international monetary institutions keep downgrading the country’s economic outlook rating on account of it. Pakistan stands to lose up to $10 billion every year for being on the grey list.