Pakistani officialdom was quite confident that Pakistan will make it to the white list of the FATF but they were badly disappointed when the country was made to stay in the grey list till the next review in June 2021. The failure of not making it to the white list rankled Pakistani financial decision makers as they were aware that there are examples where other nations were taken off the list of countries under enhanced monitoring by the global watchdog although they did far less than Pakistan which worked hard to tighten its anti-terror-financing and money-laundering controls over the last two years.
In this context it is worthwhile to mention that Pakistan has decisively complied with 24 out of the 27 actions suggested by the FATF and this outstanding performance surely considered enough by Pakistani decision makers to feel hopeful about getting out of grey list. Pakistan’s efforts were duly recognised by the FATF as is evident by its statement mentioning the “significant progress” though it did not mince words by adding that there existed many serious deficiencies remain in the mechanisms to eliminate terror financing.
Despite their earnest efforts, FATF decision has hit the Pakistani financial managers badly and has clearly indicated that further efforts were not only needed in this respect but that too with utmost urgency. It is more than evident that doing so will not be easy for the state as it is clear that unlike the past the world wants complete compliance with the global body’s exacting standards this time around. The FATF president’s statement that the watchdog will verify the completed actions and members of the task force would vote to remove Pakistan from the list of countries on the grey list will only be possible as soon as they improve their investigations and prosecutions of all groups and entities financing terrorists and their associates and show that penalties by courts are effective underlines this new reality.
There is hardly any doubt that complete compliance will bring its own dividends for the economy as the increasing inflow of remittances through legal channels is only one of the many economic benefits that Pakistan stands to reap from adopting global standards on illicit financing. It is also mentioned that getting out of the grey list is not the end of the matter as there is bound to be a tough struggle for a much longer time until the world learns to look upon this country as a responsible and trustworthy partner in the international fight against terrorism.
The work in this respect has begun as Pakistanis bracing to make further legislation on at least two counts to meet three outstanding benchmarks of the 27-point action plan of the Financial Action Task Force (FATF) before the June deadline. In addition, the government will have to submit an updated report within a month to the FATF on the progress on legislation and other steps to be taken to address the outstanding concerns. It was observed that since the government had changed almost three dozen laws over the past year to meet the FATF requirements, there should not be any hurdle in the way of making two more amendments.
The government is in the process of finalising the timelines for additional legislation in consultation with agencies of the federal government and the armed forces. The deadlines should be reasonable to be shared with the FATF and all agencies and stakeholders should act in close coordination to meet the deadlines well in advance. The additional legislation has to cover some weaknesses in the existing framework that limited the authorities from taking action, including imposing sanction or apprehending those acting for or on behalf of designated terrorist entities or individuals and prosecuting targeted persons and entities or those working for them, within certain deadlines.
The three outstanding action points include (i) demonstrating that TF investigations and prosecutions target persons and entities acting on behalf or at the direction of the designated persons or entities, (ii) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions, and (iii) demonstrating effective implementation of targeted financial sanctions against all designated terrorists, specifically those acting for or on their behalf. It was reported that reasonable progress had already been achieved on one out of three remaining points but two areas that required additional legislation would be time consuming.
The unity of purpose, team work and meticulous coordination among various ministries and departments concerned have is required to be made to achieve the target of completing FATF action plan despite enormous challenges. The time frame given by the FATF is short when viewed in the backdrop of the intricacies involved in complying with the FATF conditions. All government departments involved in this exercise are entrusted with tremendous responsibilities regarding fulfilling the requirements of FATF and it is expected that they will discharge their duties efficiently. TW