FATF challenge: Potential blacklisting could result in freeze of capital inflows: IMF

A potential blacklisting by Financial Action Task Force (FATF) could result in a freeze of capital inflows to Pakistan, jeopardising the financing assurances under the programme, says International Monetary Fund (IMF). The IMF in its report, "Request for an Extended Arrangement under the Extended Fund Facility" stated that the effectiveness of Pakistan''s AML/CFT regime must be urgently strengthened to support its exit from the FATF list of jurisdictions with serious deficiencies.
Pakistan was placed in the FATF list in June 2018 owing to shortcomings in effectively addressing the terrorist financing risks. The authorities are stepping up efforts to implement all measures committed to in an action plan with the FATF (end-October 2019 structural benchmark) to support the country''s exit from the FATF list. The National Executive Committee (NEC) is monitoring and coordinating efforts to implement the FATF action plan. The Asia Pacific Group on Money Laundering is expected to discuss Pakistan''s mutual evaluation report in August 2019. The authorities will work with technical assistance providers, including the IMF, to complete the action plan and further strengthen the effectiveness of the AML/CFT regime.
The government has assured that it will urgently strengthen the AML/CFT framework in line with international standards to support the country''s exit from the FATF list of jurisdictions with serious deficiencies.
Owing to shortcomings in effectively addressing terrorist financing risks, Pakistan was placed in the FATF list in June 2018. Pakistan committed to an action plan with the FATF, which includes measures to: (a) properly identify and assess terrorist financing (TF) risks posed by entities as given in the FATF action plan; (b) complete the sectoral risk assessment on cash couriers; (c) implement targeted financial sanctions without delay (ie. asset freezing and ongoing prohibitions to provide funds and financial services); (d) apply a risk-based supervision of financial institutions (e.g. on-site inspection schedules and off-site assessments ) taking into account TF risks; (e) demonstrate enforcement against violations of TF sanctions and (f) improve inter-agency coordination (including between federal and provincial authorities) in combating TF risks, including TF investigations and prosecutions. The government is moving to swiftly implement all measures (end-October structural benchmark) to support the country''s exit from the FATF list.
The National Executive Committee (NEC) is monitoring and coordinating efforts to implement the FATF action plan. The Asia Pacific Group on Money Laundering is expected to discuss Pakistan''s mutual evaluation report in August 2019. The government is seeking technical assistance from providers, including the IMF, to support its efforts to complete the action plan and further strengthen the effectiveness of the AML/CFT regime. The authorities are committed to fully implementing the action plan agreed with the FATF to facilitate an early exit from the FATF list.