Terror Funding Watchdog Gives Pak February Deadline

It is “highly probable” that Pakistan will be formally black listed by global terror funding and money laundering watchdog FATF if it does not swiftly act against terror funding by February 2020.

The Financial Action Task Force (FATF) on Friday expressed serious concerns over the lack of progress made by Pakistan to address its terror financing risks.

“Pakistan needs to do more and faster. If by February 2020, Pakistan doesn’t make significant progress, it will be put in the ‘Black List’,” FATF President Xiangmin Liu said while addressing a press conference on the last day of its five-day plenary in Paris.

While Pakistan has escaped the terror black list, according to sources, there was a consensus among members in the global watchdog to retain Pakistan in ‘grey list’ based on its 27-point action plan.

A decision on the status of Pakistan will now be taken by FATF in February next year

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.”

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 statement from the global watchdog said.

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 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 its 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.

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.

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.

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.

The crucial session was attended by a delegation of Pakistani officials headed by Minister for Economic Affairs Hammad Azhar.

“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. This was based on its technical compliance being rated as satisfactory on only 10 points out of 40.

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.


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