The Asia Pacific Group adopted on Wednesday Pakistan’s third mutual evaluation report, which identified a number of areas where further actions were required to strengthen anti-money laundering and combating the financing of terrorism framework.
The APG held its 22nd annual meeting in Canberra from August 18 to 23. A high-level Pakistani delegation headed by State Bank of Pakistan Governor Dr Reza Baqir attended the meeting.
The report adopted at the meeting covered the period Feb-Oct 2018, said a statement issued by the Ministry of Finance. It did not cover the areas in which the Government of Pakistan made substantial progress since October 2018.
During the discussions, the Pakistani delegation welcomed engagement with the international community in its efforts to counter terrorism and money laundering.
The delegates briefed APG members on the steps taken in recent times for improving Pakistan AML/CFT framework, as well as the actions for ensuring effective implementation of the FATF action plan.
Pakistani officials also held a number of bilateral meetings with key delegations. During the meetings, they briefed the participants on recent progress by Pakistan in implementing the FATF action plan.
Pakistan is a member of the APG since 2000. The APG is a regional body of Financial Action Task Force (FATF) and requires its members to undergo mutual evaluation on the compliance of its AML/CFT framework with FATF recommendations.
During the meetings, Pakistan’s Financial Monitoring Unit (FMU) also signed an MoU with the China’s Anti Money Laundering Monitoring and Analysis Center (CAMLAC) on exchange of financial intelligence.
The APG will review the MER and present its report to the FATF next month. On the basis of the APG report, the FATF will make a decision in October whether to exclude Pakistan from its grey list, keep it there or put it on the black list.
In June, the FATF had given Pakistan four months (till October) to improve its “counter-terrorist financing” operations in accordance with the agreed plan.
In a statement on its website, the FATF had expressed concern that “not only did Pakistan fail to complete its action plan items by January deadline; it also failed to complete its action plan items due May, 2019”.
“The FATF strongly urges Pakistan to swiftly complete its action plan by October, 2019 when the last set of action plan items are set to expire,” the FATF statement said. “Otherwise, the FATF will decide the next step at that time for insufficient progress.”
Pakistan was told to block financial loopholes, terror financing and money laundering by implementing the 27-point action plan.
Based out of Paris, the FATF is an inter-governmental body that combats money laundering, terrorist financing and threats to the international financial system. It put Pakistan on its grey list in June 2017 because of deficiencies in the country’s Anti-Money Laundering and Countering of Terrorist Financing regulations.
Being on the grey list doesn’t come with any sanctions, but if we remain on this list, we face the risk of being put on the black list. This is where it gets problematic.
Being on the black list means our banking system will be regarded as one with poor controls over AML and CFT standards — forget bringing PayPal to Pakistan, expatriates will find it difficult to send remittances and traders’ cost of business will increase because our banks will face higher scrutiny in international payments and foreign banks might not even do business with Pakistani banks. The government, too, will struggle to raise funds from international markets if we are placed on the black list.