SYDNEY: In a major setback to Pakistan, the Financial Action Task Force's (FATF's) Asia Pacific Group (APG) on Money Laundering has kept the country on "Enhanced Follow-up List" for its slow progress on the technical recommendations of the FATF to fight terror financing.
According to sources, Pakistan's progress has remained unchanged -- non-compliant on four counts.
According to an APG report, "Whilst Pakistan published a National Risk Assessment (NRA) on Money Laundering and Terrorism Financing in 2017, the mutual evaluation report (MER) identified gaps in the process of developing and identifying threats, vulnerabilities and risks. The assessment of terrorist-financing risk was identified as "perfunctory only"."
"The MER also found that the 2017 NRA had not yet been widely circulated to private sector stakeholders and that sectors assessed as higher risk or higher vulnerability in Pakistan were not yet subject to comprehensive Anti-money Laundering and Terrorist Financing (AML/CFT) measures," the statement said.
Earlier, Pakistan had requested re-ratings for Recommendations 1, 6, and 29, which were all rated as "partially compliant".
The APG stated that while insufficient progress has been made to justify a re-rating of Recommendation 1, Pakistan has raised a major disagreement with the process, analysis and rating for Recommendation 6, related to targeted financial sanctions on terrorism and terrorist financing.
According to the APG report, "While progress has been made on Recommendation 1, it is not yet sufficient to justify a re-rating. The analysis and rating for Recommendation 6 are subject to a major disagreement and consistent with the APG Mutual Evaluation procedures, consideration of this Recommendation has been referred for in-session discussion at the next APG Plenary meeting and is not considered in this report."
Thus, the APG said, Pakistan will remain in "enhanced (expedited) follow-up" and will have to "continue to report back to the APG on progress to strengthen its implementation of AML/CFT measures."
Pakistan is in the FATF's grey list since June 2018 and the government was given a final warning in February to complete the remaining action points by June 2020. Another review meeting will be held later this month.
The FATF extended the June deadline to September due to the spread of coronavirus that disrupted the FATF plenary meetings.
The country is facing the difficult task of clearing its name from the FATF grey list. As things stand, Islamabad is finding it difficult to shield terror perpetrators and implement the FATF action plan at the same time.
In recent weeks, Pakistan has been trying to paint a picture that it has started the reforms, including passing of some Bills in order to prevent blacklisting by the FATF.
In late July, Pakistan Financial Monitoring Unit Director-general Lubna Farooq told the National Assembly Standing Committee on Finance that the country is yet to comply with 13 conditions out of the 27-point Action Plan of the FATF, including curbing terror financing, enforcement of the laws against the proscribed organisations and improving the legal systems.