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The sword of FATF, it seems, will continue to hang over our heads until after February next year when we would know our fate: whether we continue to remain in the 'grey list' or are taken out of it or consigned to the 'black list'.
All through the 15 months allowed to us for complying with the FATF conditions for leaving the 'grey list' the government had kept feeding a concerned domestic public with what sounded like feel-good stories about the progress it was making on the action plan only to be told by the Asia Pacific Group (APG) after it ended its five-day meet in Paris on October 18 that we are still too far away from the exit door.
"To date, Pakistan has only largely addressed five of 27 action items, with varying levels of progress made on the rest of the action plan," the APG further said.
The FATF again expressed serious concerns with the overall lack of progress by Pakistan to address its TF (terror financing) risks, including remaining deficiencies in demonstrating a sufficient understanding of Pakistan's transnational TF risks, and more broadly, the country's failure to complete its action plan in line with the agreed timelines and in the light of TF risks emanating from the jurisdiction.
What little we know about where we stand today with regard to the progress we have made so far on the action plan has come from the APG and that too in the most general terms. Our own government has been too stingy about this matter. We do not know on which five points have we made progress and what are the remaining 22 points and why there has been no progress on these points.
Since the matter concerns the state of Pakistan and not the government of the day alone, all problems related to the issue need to be debated openly at the national level so that we are not caught by surprise once again when the grace period of four months ends.
Last time as well, an IMF programme (2013-2016) had run alongside our efforts to get out of the 'grey list' in which we had landed for a second time in 2012. The first time was 2008. We scrapped through the IMF programme with as many as 13 waivers in 2016 and exited the FATF 'grey list' in 2015 perhaps with many more waivers because perhaps the powers that be that run the world affairs did not want a nuclear Pakistan to go under economically and up into political chaos.
Perhaps once again for the same reason we would be allowed to complete the ongoing IMF programme by 2022 and hopefully, with fingers crossed, allowed as well to exit the 'grey list' by 2021.
If the commentary by international news media is any indicator, Pakistan's placement on FATF's 'grey list' is far more political than financial in nature.
It is being seen as one of the several ways the US is attempting to pressure Pakistan to "do more" on issues related to terrorism.
The long-winded, jargon-filled recommendations and methodology used by FATF leave plenty of flexibility for the team of assessors to exercise their "informed judgement".
That is, based on the same information, assessors could reach more than one judgement, including the one sought by the politically powerful.
By placing Pakistan on FATF's grey list, the US has indeed demonstrated its intent to turn up the pressure on Pakistan.
Bottomline is that FATF's grey listing of Pakistan should not be looked at in isolation but placed in the larger picture of US-Pakistan relations that have had many ups and downs.
Indeed, the very governing structure of the APG is exceptionally unfriendly. The unexpected curtailment of the Afghan peace process with seemingly no hope of its resumption in foreseeable future despite the unofficial meeting between Zalmay Khalilzad and the Afghan Taliban representatives led by Mullah Brather in Islamabad last month seems to have once again brought Pakistan face to face with a very hostile United States at the FATF session in Paris. The US is the president of FATF represented by Marshall Billingslea, a serving Assistant Secretary of US Treasury who also heads the office of Terrorist Financing Crimes. Australia which is part of the anti- China (read anti-Pakistan as well) Indo-Pacific alliance is the Vice president of the APG and India which has already vowed to isolate Pakistan economically is the Co-chair of the APG. With such a formidable combination of hostile forces sitting on the review panel one had not ruled out a rigged judgment at the Paris meet. The only redeeming feature in the administrative set up is China which sits on the AGP as its Vice-President represented by Xiangmin, Director General of the Legal Department at the People's Bank of China.
Equally worrisome is the fact that the European Commission (EC) has already placed Pakistan in its list of inadequate jurisdiction on Anti-Money Laundering and Counter Terror Financing regimes.
The FATF Standards established in April 1990 on Money Laundering and terror financing issued a set of 40 Recommendations. The following is a gist of these recommendations:
1. Pursue money laundering, terrorist financing and the financing of proliferation;
2. Apply preventive measures for the financial sector and other designated sectors;
3. Establish powers and responsibilities for the competent authorities (eg, investigative, law enforcement and supervisory authorities) and other institutional measures; and
4. Enhance the transparency and availability of beneficial ownership information of legal persons and arrangements; and facilitate international cooperation.
It seems FATF's concerns are mainly regarding financing of terrorism. This is also made clear when we look at the 10 actions Pakistan is being asked to take to exit the list:
1. Adequately demonstrating its proper understanding of TF risks posed by the terrorist groups above, and conducting supervision on risk-sensitive basis;
2. Demonstrating that remedial actions and sanctions are applied in cases of AML/CFT violations, and that these actions have an effect on AML/CFT compliance by financial institutions;
3. Demonstrating that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS);
4. Demonstrating that authorities are identifying cash couriers and enforcing controls on illicit movement of currency and understanding the risk of cash couriers being used for TF;
5. Improving inter-agency coordination including between provincial and federal authorities on combating TF risks;
6. Demonstrating that law enforcement agencies (LEAs) are identifying and investigating the widest range of TF activity and that TF investigation and prosecutions target designated persons and entities, and persons and entities acting on behalf or on the direction of the designated persons or entities;
7. Demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions and enhancing the capacity and support for prosecutors and judiciary;
8. Demonstrating effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all 1267 and 13 73 designated terrorists and those acting for on their behalf, including preventing the raising and moving funds, identifying and freezing assets (movable and immovable), and prohibiting access to funds and financial services;
9. Demonstrating enforcement against TFS violations including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases; and
10. Demonstrating that facilities and services owned or controlled by designated persons are deprived of their resources and the usage of resources.
Copyright Business Recorder, 2019