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Will Pakistan exit the FATF grey list? Global watchdog decides today

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The Financial Action Task Force (FATF) will make public the outcome of its three-day plenary today, deciding whether Pakistan remains on its grey list or not.

Pakistan has been on the FATF’s increased monitoring list, also known as the grey list, for deficiencies in its counter-terror financing and anti-money laundering regimes since June 2018.

The virtual meeting of the FATF Plenary will take place under the presidency of Dr Marcus Pleyer today, while delegates representing 205 members of the Global Network and observer organisations including the International Monetary Fund, the United Nations and the Egmont Group of Financial Intelligence Units will also take part in the meeting.

According to the FATF website, “The FATF will finalise key reports, including the revised guidance on virtual assets and their service providers and discuss next steps to strengthen its standards on transparency of beneficial ownership.

“Delegates will also discuss the outcomes of the FATF’s survey to identify areas where divergent anti-money laundering and counter terrorist financing rules or their implementation cause friction for cross-border payments. FATF is leading work on this aspect of the G20’s priority to improve cross-border payments.

“The FATF will also update its statements identifying jurisdictions with strategic deficiencies in their measures to combat money laundering and terrorist financing,” the website said.

The FATF in its last session in June had kept Pakistan on the watchdog’s “increased monitoring list” till it addressed the single remaining item on the original action plan agreed to in June 2018 as well as all items on a parallel action plan given by the Asia Pacific Group — the FATF’s regional affiliate.

“Pakistan has made significant progress and it has largely addressed 26 out of 27 items on the action plan it first committed to in June 2018,” FATF President Dr Marcus Pleyer had said at a post-plenary presser.

He had, however, pointed out that the remaining item on financial terrorism still needed to be addressed which concerned the “investigation and prosecution of senior leaders and commanders of UN-designated terror groups”.

The FATF, after discussion, had decided to maintain status quo for Pakistan — countries in increased monitoring. It hoped the remaining action item would be completed before the FATF’s next plenary scheduled for October.

Shortly after the announcement, the then minister for industries and production Hammad Azhar had said that the APG had given seven additional action points under a parallel mutual evaluation mechanism under which Islamabad had largely completed 75 out of 82 action points.

Azhar had said Pakistan would complete within three-four months the only remaining FATF target on speedy prosecution of the UN-designated terror groups’ leaders.

He had said the government had set a target for itself to complete APG’s seven action points within 12 months — a target most jurisdictions achieve in two years.

Pleyer had made it clear that Pakistan’s delisting from grey list would not take place until both action plans were completed and the members then came to a conclusion that systems and efforts against financial risks were sustainable.

He had said the rules were very clear and equally applicable that jurisdictions under increased monitoring list had to complete all action points and fully address the risks.

Under the new action plan, Pakistan will have to address its strategically important AML/CFT deficiencies. These include enhancing international cooperation by amending the MLA law, demonstrating that assistance is being sought from foreign countries in implementing UNSCR 1373 designations and also that supervisors are conducting both on-site and off-site supervision commensurate with specific risks associated with designated non-financial businesses & professions (DNFBPs), including applying appropriate sanctions where necessary.

The new actions also require Pakistan to demonstrate that proportionate and dissuasive sanctions are applied consistently to all legal persons and legal arrangements for non-compliance with beneficial ownership requirements, show increase in ML investigations and prosecutions and that proceeds of crime continue to be restrained and confiscated in line with Pakistan’s risk profile, including working with foreign counterparts to trace, freeze and confiscate assets. Also, the government has to demonstrate that DNFBPs are being monitored for compliance with proliferation financing requirements and that sanctions are being imposed for non-compliance.

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