by Khaleeq Kiani in Dawn, October 11th, 2018
ISLAMABAD: Not impressed with the progress made so far, a delegation of the Asia Pacific Group (APG) has asked Pakistan to do more and get its house in order so that it may get out of the grey list of the Paris-based Financial Action Task Force (FATF).
Apparently the group members found the legal framework insufficient, and the institutional arrangements weak. According to sources, the delegation feared that the set-up installed for scrutinising the activities of non-profit organisations, brokerage houses, exchange companies and donations of corporate entities — registered under the companies act — was not robust enough.
The sources said that the APG believed that even in areas where the legal framework appeared vigorous, the implementation mechanism was not geared to track down financial flows of the entities in question, because the agencies involved were not well-connected. This weakness was prominent in real estate brokerages where large business transactions remained outside the ambit of legal records.
A team of the Securities & Exchange Commission of Pakistan (SECP) reported to the APG that brokerage houses were largely documented though real estate dealers and their operations were generally outside its area of regulation. The APG also noticed shortcomings in commodity trading — and the effectiveness of laws against money laundering through cross-verification of service providers.
The sources said the delegation asked the relevant authorities to issue deadlines for resolving the flagged weaknesses so that the problems could be remedied and future performance evaluations be made on the proposed matrix. The authorities would also have to properly record the number of donation boxes placed by religious and other organisations at restaurants and business centres among other places. Besides, all currency and real estate dealers would have to record every transaction — both small and large.
The purpose of the mutual evaluation onsite visit is to assess the effectiveness of Pakistan’s Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) regime under FATF methodology. The visiting team included Ian Collins of the United Kingdom’s Scotland Yard, James Prussing of the United States Department of the Treasury, Ashraf Abdullah of the Financial Intelligence Unit of the Maldives, Bobby Wahyu Hernawan of the Indonesian Ministry of Finance, Gong Jingyan of the Peoples Bank of China and Mustafa Necmeddin Oztop of the Turkish Ministry of Justice.
The ministries of interior, finance, foreign affairs and law besides the SECP, the State Bank of Pakistan (SBP), the National Counter-Terrorism Authority (Nacta), the Federal Investigation Agency (FIA), the Federal Board of Revenue, the National Accountability Bureau, the Anti-Narcotics Force, the Financial Monitoring Unit, the Central Directorate of National Savings and provincial counter-terrorism departments would remain available for briefings and explanations.
In June 2018, Pakistan made a high-level political commitment to work with the FATF and the APG to strengthen its AML/CFT regime and to address its strategic counter-terrorism financing-related deficiencies by implementing a 10-point action plan. The successful implementation of the plan and its verification by the APG is a prerequisite for the FATF to remove Pakistan from its grey list.
Earlier in August, the APG — as part of the mutual evaluation — had identified a series of deficiencies in Pakistan’s AML/CFT mechanisms. By the end of September next year, Pakistan must comply with the 10-point action plan it committed to with the FATF or else it will fall into the black list.
The authorities are required to upgrade agencies and their human resource assets to be able to handle foreign requests to block terror financing and freeze illegal assets. The authorities are working on strengthening laws for extradition of those involved in terror financing and money laundering on requests from FATF-member countries.
By January next year, Pakistan will identify and assess domestic and international terror financing risks to and from its system to strengthen investigations and improve inter-agency cooperation, the FIA, the SBP, the SECP, banks, the interior department as well as all other associated federal and provincial agencies.
https://www.dawn.com/news/1438240/inspectors-not-impressed-with-work-done-on-fatf-list
FATF recommendations: edit in Daily Times, October 11, 2018
The visiting FATF delegation still has more than a week in-country. Yet some key points have begun to emerge. Such as how the team held questions-and-answer sessions with three important agencies: the Federal Investigation Agency (FIA); the Financial Monitoring Unit (FMU); and the Anti-Narcotics Force (ANF).This is crucial to helping both sides pinpoint how and which terror financing risks have been identified and assessed. Not to mention the role of law enforcement agents (LEAs) on the investigation front. For a lot has changed since Pakistan was formally grey-listed back in June. Especially with regards to the militant-mainstreaming project. Meaning that certain outfits proscribed by the state merely underwent a name-change and participated in the summer’s elections. Naturally, this brings to the fore the question of fund-raising.
Thus the pressure is on the Imran Khan government; despite it having only been in power for around 45 days. Be that as it may, the FATF delegation is interested in immediate measures for both the short- and longer-term. Towards this end, therefore, the visiting team has directed the country to track all financial transactions totalling $3,000 and above across the board.; from real estate agents to accountants to stockbrokers to lawyers.
This makes sense. For providing a paper trail is paramount. As the Prime Minister will still recall from the afterglow of Panamagate. Yet the Centre must not overlook and therefore repeat the mistakes of the past. Namely, its own lackadaisical approach to settling its bills when it comes to media advertising. For, to be sure, the fourth estate — both electronic and print — remains one of Pakistan’s most undocumented industries as far financing goes. That is, when federal governments delay payments to ad agencies, it is media houses and employees who get burned. This results in the former operating in the red while staff receive intermittent cash payments. From whichever way this is looked at, the endgame is the same: an erasing of the money trail.
It is hoped that both PM Khan and his team as well as the FATF representatives will urgently address this state of affairs. Not least because the country’s journalists are already working in a hostile environment. And that last thing we, the fourth estate, need is a loaded gun held to our heads; demanding to know how we (barely) make our money. https://dailytimes.com.pk/308765/fatf-recommendations/
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