ISLAMABAD: Prime Minister Imran Khan has set up a high-powered 12-member National Financial Action Task Force (FATF) Coordination Committee to ensure execution of all FATF-related tasks till Dec 1.
According to media the committee will be led by Minister for Economic Affairs Division Hammad Azhar, the committee comprises federal secretaries of finance, foreign affairs and interior besides heads of all the institutions and regulators concerned with money laundering and terror financing. They include the governor of the State Bank of Pakistan (SBP), chairman of Securities and Exchange Commission of Pakistan (SECP), director general of the Federal Investigation Agency (FIA), member (customs) of the Federal Board of Revenue (FBR) and DG of the Financial Monitoring Unit (FMU). The committee also has three senior officials from the military’s General Headquarters (GHQ).
“The committee is mandated to steer the national effort on FATF,” said a notification issued by the Prime Minister Office.
Led by economic affairs minister, coordination committee comprises three secretaries, heads of some institutions and three officials from GHQ.
Before the establishment of the committee, the federal finance minister or the PM’s adviser on finance, as the case may be, and the secretary of finance used to lead all activities relating to anti-money laundering and countering the financing of terrorism (AML/CFT) to meet targets set by the FATF and its regional affiliate Asia-Pacific Group (AGP) under a comprehensive action plan to move out of the grey list of the global watchdog on financial crimes.
Pakistan is currently being monitored at three different but interlinked levels — APG, the United States and the FATF — that would determine the country’s possible exit from the FATF grey list. Given significant progress on its 10-point action plan on 27 different standards, authorities expect to secure a couple of months of grace period to be fully compliant when the country comes under final review of the FATF by mid-October.
Last week, the National Counter Terrorism Authority declared two more outfits — Hizbul Ahrar and Balochistan Raaji Ajoi Sangar (BRAS) — as proscribed organisations under Section 11-B of the Anti-Terrorism Act, putting their members and activities under surveillance. Seventy-one organisations are already on the list.
Last week, the APG on Money Laundering downgraded Pakistan to “enhanced follow-up” category over technical deficiencies to meet normal international financial standards by October 2018. This meant that the country would now be required to submit quarterly progress reports, instead of biannual, to the APG, starting from February 1, 2020, to show improvements in its technical standards on AML/CFT.
The APG has 40 recommendations on AML standards and another eight on CFT. Importantly, the progress Pakistan made since October 2018 has not been considered in this report due to APG rules based on almost 40 special standards and benchmarks for ranking on money laundering and eight special recommendations on terror financing
This is despite the fact that the authorities claim that Pakistan has made significant progress on FATF standards and action plans, but due to APG’s odd methodology it did not consider Islamabad’s achievements after October 2018. They said the strengthening AML/CFT laws were significant development to merit removal from the grey list, but these have to be formally passed by the parliament and signed into law by the president. These bills were recently cleared by the National Assembly’s standing committee on finance and revenue.
Pakistan has engaged technical assistance providers as consultants in key institutions like the FBR, SECP, FMU and SBP with the support of the International Monetary Fund and the World Bank to complete the action plan and further strengthen the effectiveness of the AML/CFT regime.
The amendments to foreign exchange regulation laws (FERA) to restrict domestic movement of currency beyond a certain limit had also been cleared by the National Assembly’s standing committee to help relevant agencies curb the practice of hawala/hundi and other forms of illegal foreign exchange transactions.
Amendments to the FERA law through its section 23 enhance punishments, make it a cognizable offence and grant powers to the FIA to take prompt action against illegal foreign exchange operators. The AML crimes are now punishable with up to 10 years imprisonment and Rs5 million fine. The amendments reduce administrative process to cooperate with financial intelligence units of other countries and prompt generation of suspicious transaction reports.
The law enforcement agencies have taken actions in recent months against proscribed organisations such as the Haqqani Network, Jamaatud Dawa and other banned outfits to demonstrate to the international community that the new leadership is committed to taking whatever steps are needed to meet its international obligations in the matter.
A supervisory framework and mechanism has also been put in place to ensure effective coordination mechanism across the chain of agencies, organisations and regulators at federal and provincial levels through dedicated focal persons.
Pakistan’s existing ground realities would now be reviewed on the basis of its progress reports and APG evaluations in coming meetings in Bangkok starting from September 5 and then finally in Paris on October 18-23 to conclude if Islamabad has delivered on 27-point action plan committed to the FATF to get out of the grey list.
Pakistan has also started bilateral engagements with key FATF and APG members to muster political support as India continues an adversarial campaign.
In June, the FATF expressed concern that not only Pakistan had failed to complete its action plan with January deadlines, it had also failed to complete its action plan which was due in May. It urged Pakistan to swiftly complete its action plan by October.
