London: The compliance count that the Financial Action Task Force (FATF) gives Pakistan on and off has come to sound deceptively like a director’s exercise. In February, the FATF said that Pakistan had taken the necessary steps in only 14 of its 27 requirements to convince the world that it was acting effectively against the financing of terrorism and money laundering. In October, the FATF gave Pakistan 21 ‘points’ out of 27.
Pakistan has been asked to demonstrate its full compliance at the next FATF plenary session scheduled for February 2021. Pakistan’s progress on the ‘score sheet’ may suggest that given the ascending graph, it might well score the highest score in a few months, which is to say that the world watchdog would be convinced, after due inspection and investigation, that Pakistan and its agencies no longer support terrorism.
A closer look at the grade sheet would suggest that such optimism is probably misplaced. Just before the FATF meeting in February this year, Pakistan announced the arrest of Hafiz Saeed. A month earlier, Pakistan passed a series of laws intended to appease the FATF, no doubt with the advice of its new advisers in Houston. The move garnered marks from Pakistan.
The FATF notes that Pakistan has taken steps to “identify and sanction illegal STDVs”, as regards money or value transfer services, essentially hawala. Pakistan has “implemented cross-border controls on foreign exchange and BNI (bearer negotiable instruments),” that is, payments in kind rather than cash.
Pakistan has also improved “international cooperation in terrorist financing cases, passing amendments to the ATA (Anti-Terrorism Law) to increase sanctioning authority, financial institutions implementing targeted financial sanctions and applying sanctions for AML / CFT violations and controlling facilities and services owned or controlled by designated persons and entities “.
The limitations here would seem self-evident. Surveillance of hawala transactions and payments in kind could have some national advantage and is being widely criticized in Pakistan for targeting opposition groups. The other steps are legislative and do not in themselves guarantee that they are being implemented. None of these inhibit the endorsement of terrorist activity within India. But Pakistan does get marks on these because they were steps it was advised to take.
More than half empty
That doesn’t make the glass half full, much less three-quarters full. The six charges Pakistan has not moved on are the six that really matter. FATF President Marcus Pleyer pointed out at the end of plenary that what remains to be done amounts to “serious shortcomings”.
The FATF has specifically detailed four of these remaining requirements:
1. “Demonstrate that law enforcement agencies are identifying and investigating the widest range of FT activities and that FT investigations and prosecutions are directed at designated individuals and entities, and those acting on behalf of or at the direction of designated persons or entities ”. Namely, the FATF says that Pakistan has not been fully investigating terrorist financing. Neither does it point these actions where they should be directed.
2. “Demonstrate that FT prosecutions result in effective, proportionate and dissuasive penalties.” Therefore, the FATF does not consider that the actions it is alleged to have taken are effective or strong enough to stop those who engage in terrorist financing.
3. “Demonstrate the effective implementation of specific financial sanctions against all designated 1267 and 1373 terrorists and those who act on their behalf or on their behalf, preventing the collection and movement of funds, including in relation to NPOs (non-profit organizations). profit) that identify and freeze assets, and prohibit access to funds and financial services. ”Most significantly, the FATF here says that Pakistan is not doing enough against designated terrorists and their emerging proxies.
4. “Demonstrate compliance with TFS violations, including in relation to NPOs, administrative and criminal sanctions, and cooperating provincial and federal authorities in compliance cases.” That simply means that Pakistan is not moving with demonstrable firmness against groups like Jaish-e-Mohammed and Lashkar-e-Toiba, because it is groups like these that are politely classified as Non-Profit Organizations (NPOs).
The deadline for taking these expired in February of this year. The FATF then said that “all the timeframes of the action plan have expired.” In its official statement on 23 October keeping Pakistan on the gray list, the FATF stated that “all the deadlines of the action plan have expired.” That is not a copy and paste statement only to the extent that in February this year the FATF said that “all timeframes in the action plan have expired.” A phraseological and non-substantive change in his observation that Pakistan has not done enough and that the time frame for doing so has passed longer than before.
Not everyone is optimistic that Pakistan will do all of this by February 2021. If you don’t, the FATF will undoubtedly remind you once again that all deadlines have expired.
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