Just over a week before a crucial meeting of the Financial Action Task Force (FATF), a key regional affiliate of the multilateral watchdog has concluded that Pakistan has complied with only two of 40 recommendations to counter the financing of terrorism and money laundering.
The Australia-based Asia Pacific Group (APG) kept Pakistan in its “enhanced tracking” category in a report adopted last month. Pakistan was fully compliant with just one of the 40 recommendations exactly one year ago, and the number increased to two after an APG assessment this year.
The FATF began holding a series of virtual meetings from Monday and will continue until October 19 to discuss issues such as international cooperation, policy development and risks and trends. The FATF will hold its virtual plenary meeting on October 21-23, which will assess Pakistan’s steps to combat terrorist financing.
People familiar with the developments said, on condition of anonymity, that Pakistan is expected to be retained on the FATF “gray list”, in which it was included in 2018, largely due to backing from China, Turkey and Malaysia. The opposition of just three members of the FATF is enough to prevent a country from being moved to the “black list”, which would imply more severe financial penalties.
The latest APG follow-up report on the Pakistan case showed that the country was “non-compliant” in four of the 40 recommendations, “partially compliant” in 25 and “largely compliant” in nine. The findings were virtually similar to the conclusions drawn a year ago, except that Pakistan fully complied with two recommendations.
“In accordance with APG procedures …, Pakistan will remain on enhanced (accelerated) follow-up and will continue to report to APG on progress to strengthen its AML / CFT implementation. [anti-money laundering/counter financing of terrorism] measures, ”the report said.
Being included in the category of “enhanced monitoring” means that Pakistan has to submit quarterly progress reports, rather than biennial, to APG.
The APG’s 40 recommendations are independent of the 27-point action set for Pakistan by the FATF. Even in the case of that action plan, the FATF concluded earlier this year that Pakistan had met only 14 out of 27 points.
The recommendations cover issues such as the assets freeze of UN-designated terrorists, the use of non-profit organizations (NPOs) by terrorist groups to raise funds, and even the state-run Pakistan Post, which is not subject to to counterterrorism financing requirements.
The APG report said that a risk assessment conducted in 2019 “confirmed that NPO abuse of TF [terror financing] the purposes continue to pose a significant threat, both domestically and externally; that charities and fundraisers are a source of funds for almost all EOCs [entities of concern]; and that terrorist organizations are known to use front-end NPOs, including registered charities (e.g. FIF [Falah-e-Insaniyat Foundation], which was a registered NPO established by LeT associates [Lashkar-e-Taiba]) “.
Pakistan has identified a total of 1,307 NPOs “as high risk” and these “will be subject to enhanced inspection,” the report added.
Sameer Patil, Fellow for International Security Studies at Gateway House, said: “Because Pakistan has been adept at taking face-saving measures just before the FATF meetings, it appears that it is doing the same thing again. Those steps may be positive for some FATF members, who will say, ‘Okay, it’s good that you did this, but now take a few more steps.’
He added: “There has been a visible reduction in the activities of terrorist groups, such as public rallies, but their workers have not disappeared and their networks and infrastructure remain. Social and charitable organizations like FIF stand and give legitimacy to terrorist groups in Pakistani society. The threat to India remains. ”
.
