Anti-money laundering agency keeps Pakistan on watch list
26 Oct 2020

A global anti-money laundering watchdog kept Pakistan on its monitoring list asking the South Asian nation to improve controls on terrorist financing while lauding authorities for recent progress.

The Financial Action Task Force strongly urged Pakistan to complete its action plan by February, following a three-day meeting. Pakistan has largely completed 21 of 27 tasks, while it has made varying levels of progress on the rest of the plan, the Paris-based watchdog said in a statement. At the last review in February, Pakistan had largely completed 14 tasks.

The decision to keep Pakistan on its so-called grey monitoring list means the country will escape being bracketed with North Korea and Iran in the blacklist, and avoid tough sanctions on its banking system, which is already reeling from the impact of the coronavirus. The International Monetary Fund had warned that a downgrade could cause capital inflows to freeze and jeopardize its $6 billion program.

“As long as we see a country is progressing in action items, and we have seen progress with Pakistan, we give them a chance to repair the outstanding issues,” Marcus Pleyer, president at FATF, said in a press briefing. An on-site inspection will happen once the action items are completed before a country is removed from the monitoring list, he said.

FATF removed Mongolia and Iceland from its monitoring list citing significant progress in addressing deficiencies.

Prime Minister Imran Khan’s government escaped a downgrade after showing progress. The measures include identifying and supervising terror financing risks and boosting controls on illicit currency movement. Pakistan has been on FATF’s monitoring list since 2018 and failed to meet four previous deadlines for completing the program.

Khan’s administration has since amended 15 laws to address shortcomings, and is also improving the capacity of the law enforcement agencies to carry out investigations and prosecution of money laundering cases, according to the finance ministry.

The six remaining tasks are “serious deficiencies,” Pleyer said.

Pakistan had also been looking for diplomatic support in FATF, which includes 37 countries and two regional organizations. China, Turkey and Malaysia have lobbied to prevent severe penalties in the past. India, which accuses Pakistan of funding militant groups operating in its portion of Kashmir, had lobbied strongly for a downgrade.

At the meeting, India offered evidence on its claim that Pakistan continued to support terror groups, according to people familiar with the matter.

By Faseeh Mangi, Bloomberg, 23 October 2020

Read more at Bloomberg

RiskScreen: Eliminating Financial Crime with Smart Technology

Advance your CPD minutes for this content, by signing up and using the CPD Wallet

FREE CPD Wallet