Pakistan assures to fully implement FATF action plan by February

Islamabad has until February 2020 to fully implement the given action plan.. (Photo courtesy: FATFNews/Twitter)

• Global watchdog warned Pakistan would be placed in blacklist if swift actions were not taken
• Experts doubt the capacity of Pakistan's implementation institutions to overcome deficiencies in such a short time

KARACHI: Pakistan has reiterated its commitment to fully comply with the recommendation of the Financial Action Task Force (FATF) by February 2020 to avoid the country’s blacklisting. However, experts doubt the capacity of relevant institutions to overcome the deficiencies needed to improve implementation in such a short time.
Pakistan managed to retain its place in FATF's grey list after the review in Paris last week, but the global watchdog explicitly warned Islamabad to curb terrorist financing or face blacklisting.
Islamabad has until February 2020 to fully implement the given action plan.
“Pakistan agreed to national action plan to fix serious weakness in anti-monetary laundering and terrorist financing framework. Despite high level commitment to fix these weaknesses Pakistan has not made enough progress. Pakistan needs to do more and it needs to do it faster,” Xiangmin Liu, president of the FATF, said at a press conference in Paris on Friday.
Liu warned that Pakistan would be placed in blacklist if swift actions are not taken. “FATF is giving this very clear warning…. if by February 2020 the country has not made significant progress we would consider further actions.”
Pakistan has reiterated its commitment to fully implement action plan to counter money laundering and terror financing within the given timeframe.
“On this issue government’s all institutions are on the same page. All institutions are committed to fight money laundering and terrorist financing,” Dr Abdul Hafeez Shaikh, adviser to the prime minister on finance and revenue, who is currently visiting the United States told journalists in Washington on Sunday.
According to the FATF Technical Compliance Index, out of a total of 40 recommendations, Pakistan was fully compliant with only one, largely compliant with nine, partially compliant with 26 and non-compliant with four recommendations.
“I think Pakistan will be able to meet its target if proper efforts are made because it is largely compliant in most categories and non-compliant in only four,” Dr Salman Shah, former finance minister, told Arab News.
However, experts believe the targets were hard to meet within a span of four months as the implementing institutions lacked capacity.
“In my personal view, this work cannot be done in four months. Technical institutions involved here need capacity building with requisite technical advice. The banking and surveillance institutions involved lack capacity. Efforts are needed to improve their capacity,” said Dr Vaqar Ahmed, joint executive director of Islamabad based Sustainable Development Policy Institute (SDPI).
He suggested that FATF and Asia Pacific Group (APG) should first provide the technical training and know-how to Pakistani institutions and then demand implementation inline with the training provided.
Many Pakistani experts also believe that the country is on the right track and maltransactions have reduced significantly. “It's hard to say if Pakistan can achieve targets for sure. But we are on the right track. The reported maltransactions have reduced significantly since the past year. But we have to be very vigilant to meet the February deadline because the repercussions are enormous”, said Komal Shakeel, Economic Policy Consultant at the Asian Development Bank (ADB).
Shakeek said that “in the context of slowed growth predicted by major international agencies and the dire need for Pakistan to expand export led growth, this [blacklisting] will be a huge blow to Pakistan's trade. Foreign exchange reserves may suffer greatly, and a blow to GDP growth may eventually lead to stagflation.”
To avoid further downgradation in February next year, Dr Ahmed suggests expedited diplomatic efforts to complement the implementation of the action plan. “Malaysia, Turkey, Saudi Arabia and China can play a big role in further relaxation in February 2020. We need to actively engage ourselves diplomatically with these four countries,” he said.