ISLAMABAD: The Asia-Pacific Group — a regional affiliate of the Financial Action Task Force (FATF) — has adopted Pakistan’s third Mutual Evaluation Report (MER) on strengthening of anti-money laundering and countering financing terrorism (AML/CFT) safeguards and is expected to make public its assessment shortly.
The Ministry of Finance on Wednesday said the 22nd Annual Meeting of the Asia-Pacific Group on Money Laundering (APG), being held in Canberra, Australia, adopted the third MER that covered the period between February and October 2018. A senior level delegation from Pakistan led by State Bank Governor Dr Reza Baqir attended the meeting.
The ministry said the third MER adopted by the APG meeting identified a number of areas where further actions were required to strengthen the AML/CFT framework. The report does not cover the areas in which Pakistan has made substantial progress since October 2018.
An official explained that this primarily meant the APG has carried out an assessment of Pakistan’s AML/CFT regime and developed an opinion on where Pakistan stood with reference to FATF standards in October 2018. Importantly, the progress that Pakistan made since October 2018 has not been considered in this report due to APG rules based on almost 40 special standards and benchmarks for determining a country’s ranking on money laundering and eight special recommendations on terror financing.
Much work still remains for next round of evaluations in September and October
Therefore, the APG assessment of Pakistan’s third MER may not truly reflect Pakistan’s existing ground realities that will be reviewed in the Sept 5 meeting to be held in Bangkok and then finally in Paris on Oct 18-23 to determine if Islamabad has delivered on its 27-point action plan committed to the FATF to exit the grey list.
The Pakistan delegation has started bilateral meetings with key APG members until the end of current meetings on Aug 23 to brief them on recent progress by Pakistan in implementing the FATF action plan. An official told Dawn that the APG and many of its members were appreciative of the legislation being made, rules being improved and actions taken against banned outfits and revision in risk assessments of all corporate and non-corporate manuals, entities and outfits.
He said the APG had previously visited Islamabad in February 2018 and then conducted onsite verification again in October 2018. He said the APG was expected to make public Pakistan’s MER and its own assessment within a couple of weeks. Based on these, the APG is likely to suggest certain additional actions as part of an ongoing process with most of the member countries, the official tells Dawn.
Pakistan is a member of the APG since 2000. APG is a regional body of Paris-based FATF of the United Nations and requires its members to undergo mutual evaluation on the compliance of its AML/CFT framework with FATF recommendations.
During the meetings in Canberra, Pakistan’s Financial Monitoring Unit (FMU) also signed a memorandum of understanding with China’s Anti-Money Laundering Monitoring and Analysis Centre (CAMLAC) on exchange of financial intelligence.
Officials claim Pakistan has made “substantial progress” on its FATF action plan by strengthening AML/CFT laws and safeguards that they believe merit removal of the country from the grey list. They said the proposed laws’ clearance by parliamentary committees had been welcomed but would need approval by the parliament for implementation before the October 18-23 final review.
Major progress, they said, came about over the last six months as the International Monetary Fund flagged compliance with APG/FATF action plan a major factor to ensure external inflows.
The amendments in foreign exchange regulation laws (FERA) to restrict domestic movement of currency beyond a certain limit are viewed by Pakistani officials as a key development to curb the practice of Hawala/Hundi and other forms of illegal foreign exchange transactions.
Amendments to FERA law through its section 23 enhanced punishments, made it a cognizable offence and gave powers to the FIA to take prompt action against illegal foreign exchange operators. The AML crimes are now punishable with up to 10 years imprisonment and Rs5 million fine, reduced administrative process to cooperate with financial intelligence units of other countries and prompt generation of suspicious transaction reports.
The law enforcement agencies have taken actions in recent months against proscribed organizations such as Haqqani Network, Jamaatud Dawa and other banned outfits to demonstrate to the international community that the new leadership was committed to taking whatever steps are needed to meet its international obligations in the matter, Pakistani officials involved in FATF deliberations tell Dawn.
A supervisory framework and mechanism has also been put in place to ensure effective coordination mechanism across the chain of agencies, organizations and regulators at federal and provincial levels through dedicated focal persons.