Pakistan Escapes FATF Black List For Now; Given Feb 2020 Deadline To Stop Terror Funding
Currently, Pakistan is in the 'Grey List' of countries whose domestic laws are considered weak to tackle the challenges of money laundering and terrorism financing.
Recent development stated that Pakistan was able to address only five out of 27 target and the members of the Paris-based global terror watchdog unanimously decided to express serious concern with the overall lack of progress in addressing its transnational risks.
Sources privy to FATF deliberations added that, "In light of the additional fact of Pakistan's poor performance on its Mutual Evaluation, chances of Pakistan exiting the Grey List in the next few years are now reduced to nil. The possibility of a formal Black Listing in Feb 2020 is now highly probable."
A statement from FATF post the decision read: Should significant and sustainable progress not be made across the full range of its action plan by next Plenary, the FATF will take action, which could include the FATF calling on its members to advise their financial institutions to give special attention to business relations/transactions with Pakistan.
The note further stated, "Pakistan has only largely addressed five of the 27 action items, with varying levels of progress made on the rest of the action plan." The country was placed on the Grey List by the watchdog in June 2018 and was given 15 months to complete the implementation of a 27-point action plan, failing which it would be placed on a list that includes countries like Iran and North Korea.
The FATF has also expressed serious concerns with the "overall lack of progress by Pakistan to address its Terror Financing risks, including remaining deficiencies in demonstrating a sufficient understanding of Pakistan's transnational TF risks." The language used by the FATF in its statement on Pakistan has striking similarities as that used for Iran, which is already on the Black List.
By making this decision public, FATF in effect has given notice to global financial institutions that they need to prepare for the imminent 'red-flagging' of the jurisdiction and ready their systems for the eventuality of Pakistan entering the FATF 'Black list' in February 2020.
It included safeguards against money-laundering and terror-financing by banned outfits and non-government entities through banking and non-banking jurisdictions, capital markets, corporate and non-corporate sectors like chartered accountancy, financial advisory services, cost, and management accountancy firm, jewellery and similar related services.
The crucial session was attended by a delegation of Pakistani officials headed by Minister for Economic Affairs Hammad Azhar. Representatives from 206 countries and jurisdictions around the world began a meeting for the FATF Week in the French capital earlier this week. Six days of meeting were focused on disrupting financial flows linked to crime and terrorism and discuss ways to contribute to global security.
"More broadly, Pakistan's failure to complete its action plan in line with the agreed timelines and in line with the TF risks emanating from the jurisdiction," the FATF statement added. In August 2019, the Asia Pacific Joint Group (APJG) of the FATF had placed Pakistan in the Enhanced Follow up list for failure to meet its standards.
Of the 40 technical compliance parameters, Pakistan was 'non-compliant' on 30 parameters. And, of the 11 effectiveness parameters, Pakistan was adjudged as 'low' on 10. According to reports, Islamabad had been engaged in hectic lobbying in a last-ditch bid to influence the outcome in its favour. This year, Pakistan's all-weather ally China held the presidency of the FATF.
(With inputs from ANI)
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