EDITORIAL: Pakistan was taken out of the ‘grey list’ by Financial Action Task Force (FATF) against money laundering and terrorism financing during its plenary session with the decision announced on 21 October.
This has been welcomed across the political divide though a significant portion of the credit for this achievement pertains to the actions taken and processes adopted during the tenure of the previous administration, with Hammad Azhar playing a key role as per the then Prime Minister, Imran Khan, relevant institutions, the offices of the army chief, ISI, military intelligence and military operations to ensure that no stone remained unturned in the exercise to get off the grey list.
Habib Bank and its chairman Sultan Allana also made a stellar contribution to this national effort of identifying consultants, putting together a competent team that made templates to get the work done, participated in report content and organised workshops and training sessions. The role of the incumbent government that ensured removal from the list needs to be acknowledged as well.
Be that as it may, two observations are in order. Firstly, Indian External Affairs Minister S Jaishankar claimed in October 2021 that “due to us Pakistan was retained in the grey list,” prompting justified anger by the then Pakistani cabinet members however when asked Dr Pleyer, the FATF President at the time, stated that FATF is a technical body and “we take our decisions by consensus…so it’s not only one country that makes decisions.”
And secondly, while some members of the incumbent government are taking credit for the removal of the country from the ‘grey list’ by claiming that Pakistan’s re-engagement with other countries, particularly the United States, may have played a positive role in the FATF’s decision yet one would hope that in this instance, in spite of the extreme divisiveness prevailing in the country today, the credit be accorded where its due; notably, to all stakeholders, current and past.
Pakistan was one of two countries declared as a jurisdiction no longer subject to increased monitoring by the FATF. With respect to the other jurisdiction, Nicaragua, FATF stated that it is “strongly concerned by the potential misapplication of the FATF’s standards resulting in the suppression of Nicaragua’s non-profit sector.
Nicaragua should continue to work with GAFILAT to improve further its AML/CFT regime, including by ensuring its oversight of NPOs is risk-based and in line with the FATF Standards.” In marked contrast, FATF welcomed “Pakistan’s significant progress in improving its AML/CFT regime.
Pakistan has strengthened the effectiveness of its AML/CFT regime and addressed technical deficiencies to meet the commitments of its action plans regarding strategic deficiencies that the FATF identified in June 2018 and June 2021, the latter of which was completed in advance of the deadlines, encompassing 34 action items in total.
Pakistan is therefore no longer subject to the FATF’s increased monitoring process. Pakistan will continue to work with APG to further improve its AML/CFT system.” This clean chit is notwithstanding severe criticism against amendments to the National Accountability Bureau Ordinance tabled in parliament on 27 May 2022, two days before the withdrawal of the prohibitive unfunded subsidies applicable since 1 March 2022 defined by Foreign Minister Bilawal Bhutto-Zardari as a ‘suicide attack’ by the former premier on the country’s economy.
The fact that after four years Pakistan is no longer on the ‘grey list’ must be appreciated by all. It is important to note that multilaterals, including the International Monetary Fund and the World Bank, and bilaterals vigorously examine and analyse FATF conditions when considering support and for this very reason the IMF quarterly reviews have a section on AML/CFT and Pakistan’s progress in this regard since the start of the ongoing loan in July 2019.
In the seventh/eighth reviews successfully completed in September 2022 the IMF set two structural benchmarks (SBs) with respect to strengthening the effectiveness of anti-corruption institutions: (i) regulations to establish an electronic asset declaration system (end-March 2022 SB, reset to end-September 2022) that is comprehensive (i.e. covering assets beneficially owned or located abroad)…the Finance (supplementary) Act of 2022 authorises FBR to provide access to asset declarations of politically exposed persons and public servants in BPS-17 and above (including their spouses, children, benamidars or when they are beneficial owner); (ii) a task force to be established by the Ministry of Law and Justice and undertaken in consultation with the Ministry of Finance with participation and inputs from reputable independent experts with international experience and civil society organisations including NAB to enhance their independence and effectiveness in investigating and prosecuting corruption cases, with proposals for legislative amendments as appropriate (new end-January SB); and (iii) enhancing the use of AML tools to support anti-corruption efforts to identify politically exposed persons and apply enhanced due diligence measures.
All the authorities will have to implement these SBs as well as remain vigilant especially with respect to the politically exposed persons and bureaucrats of grade 17 and above if the government wants the ongoing programme to continue.
Copyright Business Recorder, 2022
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