Michael Hernandez and Aamir Latif
June 21, 2019•Update: June 24, 2019
WASHINGTON/KARACHI
The Financial Action Task Force (FATF), that concluded its plenary meeting at Orlando in the U.S. on Friday urged Pakistan to "swiftly complete its action plan by October 2019, when the last set of action plan items are set to expire." It has sought an action on a 10-point plan that will be reviewed in October.
A statement issued by the Pakistan government claimed that its steps to combat money laundering and terror financing have been acknowledged by the FATF. Though the 36-nation grouping has not put Pakistan on the blacklist, it will continue to be on the grey list or in the compliance document. Malaysian Premier Mahathir Mohammad had earlier confirmed the development, after his country, China and Turkey opposed putting Pakistan in the blacklist category.
India -- co-chair of the joint group of FATF and Asia Pacific Group -- wanted Islamabad to be placed on the blacklist of the countries, which fail to meet international standards in combating financial crimes.
"The FATF reviewed progress made by Pakistan towards the implementation of the Action Plan," the statement said, adding that it acknowledged the steps taken by Pakistan to improve its compliance. "The FATF highlighted the need for further actions for implementing the Action Plan," the statement issued in Islamabad added.
The FATF will undertake the next review of Pakistan’s progress in October in Paris.
The FATF meeting, while agreeing to admit Saudi Arabia as its newest member, expressed concern at the risks emanating from Iran posed a threat to the international financial system. "The FATF reaffirmed that it will continue to monitor Iran’s Action Plan, and has warned that if by October 2019, Iran does not ratify the Palermo and Terrorist Financing Conventions in line with the FATF standards, then the FATF will re-impose select additional counter-measures on Iran," a statement issued by the FATF said.
The plenary meeting also said that North Korea continues to pose an ongoing money laundering and terrorist financing risk to the international financial system. It called on all countries to apply countermeasures to protect their financial sectors from the risks emanating from the North Korea. The U.S., which completed its presidency of the FATF, said it was looking forward to Saudi Arabia’s active participation and contributions toward advancing the FATF’s goals.
Countries to regulate virtual financial activities
The U.S. Department of the Treasury Secretary Steven Mnuchin in his closing remarks said the FATF has broken historic ground by requiring all countries to regulate and supervise virtual asset financial activities and related service providers.
The grouping also adopted its ninth update on the financing of Daesh, al-Qaeda and affiliate groups for confidential circulation in order to assist countries around the world in their efforts to take swift and coordinated actions to combat the financing of these terrorist groups and affiliates.
Pakistan has been on the global money laundering watchdog’s radar since June 2018, when it was placed on a grey list for terror financing and money laundering risks after an assessment of the country's financial system and security mechanism.
At a meeting in Guangzhou, China last month, Pakistan was reportedly asked to "do more" as its compliance to 18 of the 27 indicators -- pointed out in the action plan -- was deemed unsatisfactory.
Pakistan, in recent months, has taken some major steps in accordance with the action plan, which includes bans on foreign currency transactions without a national tax number, as well as currency changes of up to $500 in the open currency market without submission of a national identity card copy.
In addition to that, Islamabad has also proscribed several militant groups and seized their assets, including Jamat-ud-Dawa’h and Jaish-e-Mohammad (JeM) -- the groups blamed for several terrorist attacks such as the 2009 deadly Mumbai attacks killing over 150 people.
The plenary identified countries that are working with the FATF to implement an Action Plan and strengthen their domestic frameworks. It also adopted the Mutual Evaluation Reports of Hong Kong and Greece, representing the culmination of a peer review by FATF members. Panama has been placed back on an international money laundering watch list.
