“Since June 2018, when Pakistan made a high-level political commitment to work with the Financial Action Task Force (FATF) and Asia Pacific Group On Money Laundering (APG) to strengthen its Anti Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime and to address its strategic counter-terrorist financing-related deficiencies, Pakistan’s continued political commitment has led to progress in a number of areas in its action plan, including: taking action to identify and sanction illegal Money or Value Transfer Services (MVTS), implementing cross-border currency and bearer negotiable instrument controls, improving international cooperation in terrorist financing cases, passing amendments to the Anti-Terrorism Act to increase the sanctioning authority, financial institutions implementing targeted financial sanctions and applying sanctions for AML/CFT violations, and controlling facilities and services owned or controlled by designated persons and entities.
Pakistan should continue to work on implementing its action plan to address its strategic deficiencies, including by way of demonstrating: (1) that law enforcement agencies are identifying and investigating the widest range of Terror Finance (TF) activity and that TF investigations and prosecutions target designated persons and entities, and those acting on behalf or on the direction of the designated persons or entities; (2) that TF prosecutions result in effective, proportionate and dissuasive sanctions; (3) effective implementation of targeted financial sanctions against all 1267 and 1373 designated terrorists and those acting for or on their behalf, preventing the raising and moving of funds including in relation to Non-Profit Organizations (NPOs), identifying and freezing assets (movable and immovable), and prohibiting access to funds and financial services; and (4) enforcement against TFS violations, including in relation to NPOs, of administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases.
The FATF takes note of the significant progress made on a number of action plan items. To date, Pakistan has made progress across all action plan items and has now largely addressed 21 of the 27 action items. As all action plan deadlines have expired, the FATF strongly urges Pakistan to swiftly complete its full action plan by February 2021—Jurisdictions under Increased Monitoring–23 October 2020, Financial Action Task Force.
Terrorism and money laundering, intrinsically linked, have been posing considerable threat to our national security and financial viability, as is the case with many other nation States. All over the world terrorists have created an atmosphere of uncertainty and fear, while the international community for the last two decades, in the wake of ghastly tragedy of 9/11, has been struggling without much success to eliminate their financial lifeline—dirty money. This money is generated through legal and illegal sources. The illegal is concealed and laundered using existing legal financial facilities and unlawful financial networks. The terrorist networks cannot be dismantled, or even confined effectively, unless concerted efforts are made at national and international levels to block their financial sources.
A book, coauthored by us, Pakistan Tackling FATF: Challenges and Solutions, highlights critical shortcoming in our laws and their enforcement to counter terrorist financing, money laundering, tax evasion and all other financial crimes. It precisely pinpoints the weaknesses in the existing anti-terrorism, anti-money laundering, tax and other laws, contradictory provisions and policies coupled with faulty strategy and lack of a comprehensive plan to uproot these menaces. In the end, it also suggests a pragmatic model for not only coming out of the grey list of FATF but for our own survival, devise and implement a model countering all the threats against our national security.
Pakistan is one of the worst hit countries by terrorism, money laundering and tax evasion. The networks and individuals, many are Politically Exposed Persons (PEPs), engaged in these nefarious activities generate huge funds through organised criminal activities, rent-seeking and by getting generous donations and funding in the name of religion or politics from “sympathisers” in and outside Pakistan in violation of various laws of the lands (details are provided in Pakistan Tackling FATF: Challenges and Solutions).
The most recent horrifying and gruesome event of massacre of the Hazaras working in a coal mine near the town of Mach, about 50 kilometer east of Quetta, on January 3, 2021, has once again proved that militant groups still have financial support, local patronage and capability to target the innocent citizens, even men in uniform, and posing formidable risk to stability required for growth and foreign investment with local entrepreneurs in joint ventures.
(To be continued tomorrow)
(The writers, lawyers and partners in Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences (LUMS))
Copyright Business Recorder, 2021