Pakistan must take ‘serious’ action to be removed from FATF’s grey list, say economic experts

KARACHI: Pakistan must take ‘serious’ action to have its name removed from the grey list of the Financial Action Task Force (FATF), financial and security experts told Arab News on Friday. The experts stressed that implementing all of the recommendations of the FATF’s Asia Pacific Group (APG) is the best way for the country to achieve that goal.
An APG delegation reviewed the measures taken by Islamabad to prevent money laundering and the financing of terror groups during its recent visit to the country. Its members were particularly concerned about the flow of funds to proscribed militant entities operating in the region.
“During the visit, the APG team asked Pakistan to enact appropriate laws, enabling local officials to act upon requests from foreign countries to freeze illegal assets and make terrorism financing and money laundering extraditable offenses,” Dr. Ikram-ul-Haq, a senior economist, told Arab News.
He added: “The team was not satisfied with the existing laws on asset freezing and mutual assistance procedures. It also expressed serious reservations about the capabilities of various institutions entrusted with the task of countering the twin menace of money laundering and terrorism financing.”
Former chief of the National Counter Terrorism Authority (NACTA), Khawaja Khalid Farooq, stressed the need to address the weaknesses in Pakistan’s investigation and prosecution of terror funding and money laundering. 
“Given the perception of Pakistan in the international community, it will not be easy for us to get off the grey list. We need to improve our financial system and diplomacy to avoid further degradation,” he told Arab News.
The APG team also called for improvements in the operations of NACTA and the Financial Monitoring Unit (FMU).
Pakistani authorities briefed the visiting team about the measures taken to counter money laundering, including the claim that seven suspicious transactions worth PKR 2 billion had been intercepted by the counter terrorism wing of the country’s Federal Investigation Agency (FIA), according to sources.
FATF officials were informed that, under the action plan, 1,111 cases of money laundering had been registered in the last three years, in connection to which 1,466 people had been arrested, with 542 convictions.
The team —  which consisted of officials from the United States, Turkey, China and the United Kingdom — will submit its report to the Paris-based Financial Action Task Force.
“The APG delegation was basically an observatory mission and it was briefed by all relevant departments about Pakistan’s efforts to curb money laundering and terrorism financing,” Saeed Javed, the Ministry of Finance’s media director general, told Arab News.
“Representatives of the APG and Pakistan will hold a second meeting in mid-September to examine progress on the action plan,” he continued, adding that that visit is particularly significant as it comes at a time when Pakistan is expected to approach the International Monetary Fund (IMF) about a bailout package. 
“Although Pakistan is not a member of FATF, global lenders, including the IMF and World Bank, attend meetings as observers and follow recommendations. Pakistan may be refused a loan or only be able to get one from the IMF at much higher rates,” Dr. Ayub Mehar, Research Economist at the Asian Development Bank Institute, told Arab News.
Dr. Athar Ahmed, a senior economist, said: “Pakistan will need at least three votes in the 37-member FATF to be removed from the grey list. The new government will have to improve diplomacy, along with its efforts to curb money laundering and terrorism financing.”
“Pakistan is moving in the right direction to curb money laundering and funding to terror outfits,” said Khurram Schehzad, senior financial analyst and chief commercial officer at JS Global Capital. “Pakistan has improved its regulatory framework during the last couple of years. The caretakers took overnight measures to implement the National Action Plan and the new government also seems serious about this issue.”
Schezad sounded optimistic that Pakistan would soon be removed from the agency’s grey list, saying “it is just a matter of time.”
Pakistan was placed on the FATF’s list of “jurisdictions with strategic deficiencies” — known as the ‘grey list’ — in June for its systematic failure to adequately counter money laundering and the financing of terrorism.
It is the third time Pakistan has featured on the list, having previously been included in 2008 and 2012.