Despite meeting 26 of 27-step action plan, FATF keeps Pakistan on grey list

This undated file photo shows a FATF meeting in progress. (Photo courtesy: @FATFNews/Twitter)

• The Financial Action Task Force placed the South Asian country on its 'grey list' due to inadequate money laundering and terror financing controls
• The FATF president says Pakistan needs to investigate and prosecute 'senior leaders and commanders of UN-designated terror groups'

ISLAMABAD: A global money laundering and terror financing watchdog announced on Friday it would continue to keep Pakistan on its increased monitoring list of countries, adding it would and work with the administration in Islamabad to remove any strategic deficiencies from the country's financial system.
"Pakistani government has made substantial progress in making its counter-terrorist financing system stronger and more effective," said Financial Action Task Force (FATF) President Dr. Marcus Pleyer while addressing a news conference through a video link.
"It has largely addressed 26 out of 27 items on the action plan it first committed to in 2018," he continued. "That action plan focused on terrorist financing issues. However, one key action item still needs to be completed which concerns the investigation and prosecution of senior leaders and commanders of UN-designated terror groups."
The FATF placed Pakistan on its "grey list" in 2018 and devised a 27-step action plan for implementation.
Pakistan's foreign minister Shah Mahmood Qureshi recently claimed that the global financial watchdog had "no justification" to keep his country on the grey list after its recent progress.
However, Pleyer also mentioned a parallel evaluation and improvement process related to Pakistan's financial system where the country was "failing."
"In addition to this [27-point action plan], a separate process has been taking place over the past few years," he said in his statement. "Back in 2019, the FATF regional partner, the APG [or] the Asia Pacific Group, identified a number of serious issues during its assessment of Pakistan's entire anti-money laundering and counter-terrorist financing system. Since then, Pakistan has made improvements. This includes clear effort to raise awareness in the private sector to Pakistan's money laundering risks."
"Pakistan is still failing to effectively implement the global FATF standards across a number of areas," Pleyer continued. "This means risks of money laundering remain high which in turn can fuel corruption and organized crime."
He added this was also the reason behind his organization's decision to continue to work with Pakistan "in areas that still need to be improved" and mostly related to money laundering risks.
"This includes increasing the number of investigations and prosecutions and making sure that law enforcement agencies cooperate internationally to trace, freeze and confiscate assets," he said.
Pleyer thanked the Pakistani authorities for their "continuous strong commitment to this process."
Later, a senior member of Pakistan's federal cabinet who has been working with the FATF told a news briefing in Islamabad that his country would fully implement the 27-point action plan before focusing on money laundering risks.
"The previous [FATF] action plan was extremely challenging and difficult since Pakistan was declared a high-risk country in terror financing which led to an increased compliance threshold," Hammad Azhar said. "The new [seven-point] action plan on money laundering is relatively less challenging because we are declared a low-risk country in the area."
He added that the government would implement the first action plan "in the next three to four months" before taking care of the other set of recommendations related to money laundering "within 12 months."
"There is no danger of blacklisting now," he said. "In fact, the whole [FATF] debate is now revolving around when Pakistan will be whitelisted."