Financial Action Task Force and Role of Pakistan for Anti Money Laundering

Project Statement

Pakistan faces the greatest challenges of terrorism, which poses serious threats to the integrity and stability of the country. It is unanimously accepted that finance serves as the basis for the implementation of terrorist activities. Terrorist groups generate funds through multiple sources and transfer them through loopholes in the economy. However, Pakistan has taken adequate measures to combat the financing of terrorism (CFT), however, money is still circulating due to some regulatory shortcomings in the economy. Due to terrorist financing shortcomings, the Pakistan Financial Action Task Force (FATF) has been placed on the ‘Gray List’.

The FATF has warned that Pakistan will be blacklisted until February 2020 unless measures are taken to address TF related errors. This paper assesses the current CFT legal framework and recommends some legal action by Pakistan before the deadline for February 2020.

The Financial Action Task Force (FATF) is a global fundraising organization called Money Laundering (ML) and Terrorist Finance (TF). The Financial Action Task Force (FATF) was launched in July 1989 by a group of seven countries (G-7) at a conference in Paris.

The initial motivation for the FATF was to explore and expand ways to combat money laundering. In 2001, the FATF expanded its wing to include efforts to combat the financing of terrorism, money laundering and human trafficking.

Those countries are considered a safe haven for terrorist financing and money laundering; included in the Gray list. The Gray List is a warning given to the world that it may not come to the black list.

Get quality help now

Sweet V

Verified

Proficient in: Money Laundering

4.9 (984)

“ Ok, let me say I’m extremely satisfy with the result while it was a last minute thing. I really enjoy the effort put in. ”

+84 relevant experts are online

Hire writer

If the country cannot stop the exploitation of terrorist financing and theft; converted from Gray List to Black List by FATF.

Pakistan was listed on the Gray list in 2012 for the first time and lasted until 2015. In June, the 2018 FATF again put Pakistan on the Gray list. In February 2018 when FATF approved the nomination of Pakistan for consideration under its International Cooperation Review Group (ICRG) known as the ‘Gray list’.

India, USA and the UK demanded that Pakistan should be included in the blacklist of the FATF while China and Turkey opposed the wish.

Currently, Pakistan is on the Gray list of the FATF. Pakistan strives to follow 27 FATF Charges. But as of October 2019; it can keep up with just 5 of the 27 findings. But Pakistan was also saved by its friend China. Now FATF has given another four-month period for Pakistan to comply with all 27 FATF points otherwise it would be listed on the staff.

FATF is an intergovernmental organization that develops and promotes anti-financial crime policies and standards. The FATF’s recommendations focused on money laundering, terrorist financing, and other threats to the global financial system. FATF was created in 1989 on the G7’s forehead and is based in Paris.

FATF currently has 39 member rules and 2 regional organizations, representing the largest financial institution in the world. Indonesia is one viewer.

FATF sets out goals / objectives, goals and promotes the effective implementation of legal, regulatory and operational measures to combat counterterrorism, money laundering, human trafficking and other threats related to the integrity of the International Financial System.

Despite the efforts, by FATF in February 2018, FATF executives remained uncertain and officially placed Pakistan on the Gray list following a Paris counter-protest meeting in June 2018. Subsequent allegations were made by FATF against Pakistan;

Allegations of money laundering are due to weak regulation, criminals still using banks, real estate, financial assets, fines, illegal financial networks, illegal money transfers. List of major money laundering offenses.

Allegations of shocking funding are fueled by negligence and a lack of adequate implementation of targeted terrorism. Incorrectness of means of obtaining and preventing illegal traffic and imbalances in initiation of expenditure by Jamaat-ud-Dawah, Falah-e-Insaniyat Foundation, Lashkar-e-Taiba etc. , use a variety of legal or illegal instrument artist to generate revenue. They make the most of financial planning positions and effectively transfer their money from one place to another.

There is a shortage of departmental co-operation, consensus and communication in the different spheres of government and Provencal. For this reason ML is less regulated. To overcome this problem the training and capacity building of Eleneral federal and provincial functions such as FIA, NAB etc., should be strengthened in the AML sector.

Pakistan has full control of the AML-related regime. There are some shortcomings and the government has been working to overcome them through legislative amendments and new laws. The main issue is the formulation of existing and proposed legislation due to the lack of capacity and training of public sector officials and members of the justice system to deal with such issues.

There are also a few other allegations made by the FATF such as fraud, inadequate resources, involvement in the banking / financial system, bad political and bureaucracy, friendly opposition, consensus settlement, weak judicial role, poor media coverage and exaggerated news. .

Pakistan has submitted a 27-point strategic plan for the country’s confrontation with ML and TF, in which it is committed to cooperate with the parties that will spend money on Daish, al-Qaeda, Jamaat-ud-Dawah and its affiliated FIF, LeT, JeM , Haqqani Network with Taliban affiliates.

India is a member of the FATF consultation and the Asia Pacific Group and is represented at this meeting by a group of officials from the Ministry of Home Affairs, Foreign Affairs and Finance. India has made a number of previous attempts and has continued its politics in the FATF. Prior to the FATF summit meeting in February 2019, India pursued its assessment of Pakistan’s progress and sought immediate support for ‘blacklisting’ Pakistan.

Pakistan, unfortunately, has been the victim of various forms of terrorism over the past decades. In particular, the wave of terrorist activities started in 2001 and culminated in 2010.

To counter the threat of terrorism in Pakistan, Pakistani law enforcement agents (LEAs) such as Pak Army etc. have started working against terrorist groups. Some Terrorist-Taliban Pakistan (TTP) terrorists moved to Afghanistan to continue their activities against Pakistan.

Under the leadership, Pakistan developed a comprehensive National Action Plan to combat terrorism. The program not only outlined the specific actions of the anti-terrorist forces, but also deprived them of terrorist financing to prevent the re-emergence of the targeted organizations. The plan also facilitated cooperation between the authorities including federal and provincial governments to remove the curse. In addition, Pakistan made one step forward by establishing special tribunals under the supervision of the military in order to speed up the prosecution of terrorist cases.

Economic reforms through reform of the rational team, raising tax revenues, effective tax revenue collection, consistent tax administration of the informal economy, the interest rate imposed by Pakistan’s small economic efforts. And the IMF is helping Pakistan with loans that can be used to repay existing debt. China has also given loan to Pakistan after the announcement of a Gray deal to help Pakistan raise its tariffs.

The Foreign Minister is brief on the legal and administrative measures taken by the Pakistani government to overcome inequalities in its financial system. Several issues, including Pak-US relations, Afghan peace process, FATF, regional differences and Kashmir, were discussed in his meetings with senior officials.

A Pakistani team led by the Beijing Ministry of Economic Affairs is holding talks with the Financial Action Task Force (FATF) Working Group. The team comprises representatives from the Ministry of Foreign Affairs, Ministry of the Interior, State Bank of Pakistan, National Economic Terrorism Forum, Culture and the Monetary Monitoring Unit. The official told the finance team about the steps taken by Pakistan to implement the recommendations made by the FATF.

China and other brotherhood countries have supported Pakistan throughout the FATF process. At recent FATF meetings, Pakistan received support for Malaysia and Turkey outside of China.

The FATF had already declared Pakistan fully compliant with 14 of the 27 points. The FATF had given 27 strategic plans in June 2018 when it put Islamabad on the Gray list.

At the October 2019 summit meeting, Pakistan was announced to fully agree on five points namely:

1. Discussing the Threat of Terrorism (CFT) is the financial sector
2. Outreach Anti Money Laundering (AML) and CFT sessions at financial institutions
3. To establish integrated information at airports
4. Mechanism to inform selected individuals and organizations; and
5. Terrorist Financing (TF) units are certain units and analysis done by the Monetary Monitoring Unit (FMU) and State Bank of Pakistan (SBP)

The FATF calculation in February 2020 found Pakistan agreeing with 9 points for the remaining points of action so Pakistan announced a consensus of 14 points out of 27 total measures. FATF found that Pakistan complied.

Despite criticism of the FATF operation, its requirements give Pakistan an opportunity to increase its capacity and put measures in place to combat terrorism and money laundering. While Pakistan expressed a clear political will to ensure the use of remedial measures, the measures initially undertaken were meaningless and responsive to the environment, thus preventing Pakistan from meeting specific FATF requirements. Now, the Khan administration is establishing an independent secretary, which is likely to ensure much-needed cooperation between the federation, the provinces, and the various institutions in order to successfully implement the FATF program.