Chances to avert FATF blacklist increase


The Financial Action Task Force (FATF) examined the compliance report of Pakistan in its meeting held in Paris on Monday and the proceedings showed that threats for the country of being placed on the blacklist have lessened compared with the past situation.

More: Pakistan fares well on FATF conditions

The Task Force expressed satisfaction over risk assessment study of Pakistan, and brotherly countries including China, Turkey and Malaysia supported the Pak stance.

Sources said the FATF appreciated efforts of Pakistan against terrorism and corruption. However, the world body called upon Islamabad for bringing improvement for targets including prosecution of those group members involved in terrorism, terror financing and money-laundering. The Pakistani delegation gave satisfactory answers to all questions of FATF, though Indians put very tough questions duringthe question-answer session.

Opinion: The FATF conundrum

The Pak delegation presented a report in the meeting, and the question-answer session would continue further. According to a mutual evaluation report, issued on Oct 2 by the Asia-Pacific Group (APG), a regional affiliate of the FATF, Pakistan, out of the 40 recommendations, has shown complete compliance in one, Financial Institutions Secrecy Law, and showed non-compliance in four areas, outlined the brokerage firm, Topline Securities, in its report.

“However, Pakistan is partially compliant on 26 and largely compliant on nine recommendations,” it added. Thus, overall, Pakistan showed progress on 36, out of 40, recommendations. It further highlighted that Pakistan had shown appropriate progress since Oct 2018.

Pakistan, among many other measures, has effectively complied with one of another strong condition, put forward by the APG, to implement measures for curbing black money in the real estate sector.

Pakistan has undertaken a plan to establish a ‘Real Estate Regulatory Authority’ to restrict black money in the sector. The Security and Exchange Commission of Pakistan (SECP) prepared an initial draft for establishment of the authority in accordance with the standards of the FATF. The country will ensure that lands and properties are not transferred in the name of any terrorist organisation or banned outfit. However, matters pertaining to taxation on the real estate sector are excluded from the scope of the authority.

Editorial: FATF conditions

Moreover, federal institutions will support the formation of the Real Estate Regulatory Authority that will make it mandatory for businessmen who are involved in the real estate businesses to register themselves with the authority and essential documentation of the businesses will follow. Importantly, a report finalised by the SECP mentioned that the comprehensive guideline developed by the Commission has helped financial institutions to generate 219 Suspicious Transactions Reports (STRs) in just one year, as compared to 13 STRs in eight years.

In order to comply with the FATF standards, it developed a set of regulations, SECP AML/CFT Regulations, in June 2018. Furthermore, it has conducted 167 inspections, focusing on AML/CFT compliance in the cases of 72 securities brokers, 27 non-banking financial companies, 13 insurance companies and 55 high risk non-profit organisations.

This year, Pakistan has made significant improvement in its systems to fight money laundering (ML) and terror financing (TF) as per international standards.

In an exclusive interview with Al-Jazeera TV in September, Prime Minister Imran Khan alleged that New Delhi was trying to bankrupt Pakistan and push it into the FATF blacklist. The 41-member APG had adopted 3rd Mutual Evaluation Report (MER) on Pakistan during Aug 13-18 meetings in Canberra, Australia, and downgraded the country to ‘Enhanced Follow-up’ category over technical deficiencies to meet normal international financial standards by October 2018. As a result, Pakistan is now required to submit quarterly progress reports, instead of biannual, to the APG, starting Feb 1, 2020 to show improvements in its technical standards on AML/CFT.

Meanwhile, Foreign Minister Shah Mehmood Qureshi on Monday said India was utilising all means to place Pakistan on the FATF blacklist.

“India is still in constant contact with some countries and with their help it is trying to put Pakistan on the FATF blacklist,” said Qureshi while speaking to the media in Islamabad and in an interview with a private TV channel.

According to another report, received from Islamabad, Pakistan has sought help from more than a dozen countries including the United States, China, United Kingdom and some European nations to control financing of terror groups from abroad, shows a highly confidential document, presented before the FATF Paris meeting to decide to put Pakistan on the blacklist, retain on the grey list or clear it of the challenge.

The Ministry of Foreign Affairs initiated some 75 requests to 15 countries, majority of whom are permanent members of the FATF, an intergovernmental organisation that makes policies to combat money laundering and terror financing. Pakistan has shared incriminating evidence with 15 countries that 18 terrorist organisations were generating huge funds to finance non-state actors in Pakistan.

The foreign affairs minister, with coordination of other ministries, sent two requests, under the mutual legal assistance (MLA) law, to the United States of America (USA) where authorities have shared undeniable evidence that Tehrik-i-Taliban Pakistan (TTP) and Jamaatul Ahrar (JuA), Omar Khalid Khorasani group, were generating funds for their operations. Islamabad generated two requests to China, four MLA requests to the UK, one to Germany, two each to Switzerland, Saudi Arabia and Malaysia, 42 to Afghanistan, four to Kuwait, one each to Oman, Iran, Egypt and Bahrain and three MLA requests were sent to Qatar, revealed the confidential document, submitted to the FATF headquarters days before its Paris meeting.

Nearly eight of 18 terrorist organisations, generating funds from aforesaid countries, have no roots in Pakistan, showed the document, which further revealed that Islamabad had yet to hear from those countries, except for Afghanistan, which responded to one of 42 requests in the past 10 months.

Pakistan wanted international cooperation on the terrorist organisations including TTP, LeJ, JuA, Harakat-ul-Ansar (HuA), Daesh, al-Qaeda, Emarat-e-Islamia, Tehrik-i-Taliban Swat (TTS), Baloch Liberation Army (BLA), Baloch Republican Army (BRA), Hamas-linked NPO, International Islamic Charitable Organisation (IICO), Revival of Islamic Heritage Society (RIHS), Zakat House Kuwait and Local NPOs/Eid Bin Muhammad Charity.

These groups are funding families of dead members/operators and raising funds for activation of training centres in Afghanistan and other countries. These organisations are sending funds from Kuwait based Hamas linked NPO, Zakat House, to madrasas and siphoning out huge amounts from accounts by cash and bank transactions in Pakistani and the UK banks and subsequently using such amounts in terrorist financing and terrorist activities, showed the document exclusively made available to Geo Television Network. Some organisations and their operators, who are facing charges of funding terrorism, collecting information, glorification and dissemination of terrorist publications, were sending money by a convicted terrorist from the UK through bank channel in Pakistan.

The Facebook profiles and pages are being used by operators of these organisations from above mentioned countries for enhancing/ promoting/ propagating/ glorifying the agenda/ intercommunication and terrorist financing of terrorist organisations. Confidential document further revealed that IICO, a Kuwait-based NPO working in Pakistan, is receiving foreign funding from international NPOs based in Egypt, Qatar, KSA, Kuwait and Bahrain, allegedly being used for terror financing.

Some Pakistan-based NPOs are also receiving foreign funding from Qatar-based international NPO ‘Eid Bin Muhammad Charity’ allegedly used for terror financing. Pakistan has also informed FATF that the use of Iran made vehicle (Zamyaad) in a terrorist act in Balochistan was also a matter of concern for authorities. In 16 such cases, Pakistan has also sent reminders to the countries concerned, read the confidential document. Further, Pakistani financial monitoring unit, an important segment of Ministry of Finance, has also received a request in terror financing cases from Kazakhstan, which was responded immediately.

The MLA requests also related to organisations posing significant terror financing threat to Pakistan, such as TTP, Lashkar-e-Jhangvi (LeJ), JuA, Falah-i-Insaniat Foundation (FIF), Jaish-e-Mohammad (JeM), Daesh, Jamaat-ud-Dawa (JuD), AQ, BLA, etc, said the document. The government has also informed FATF that Islamabad is in the process of enacting a standalone MLA law to enhance international cooperation in terror financing cases. The draft MLA Act has been approved by the federal cabinet and is currently in the process of approval from Parliament. Pakistan’s FMU is also actively engaged with various countries and had signed agreements with Turkey, Sri Lanka, Iran, Turkmenistan, Kazakhstan, Malawi, Qatar and the UK concerning cooperation in the exchange of financial intelligence related to money laundering and terror financing.

The MoUs with China, the UAE and Malawi have also been approved by the federal cabinet while MoUs with Australia, Japan, and Lebanon are under negotiations. The FMU’s Egmont Group membership is also in process. Pakistan has also approached Financial Intelligence Units (FIUs) of Iran, Turkey, Sri Lanka, Turkmenistan, Kazakhstan, Qatar and the UK to gather details for any financial intelligence on money laundering, associated predicate offences and terrorism financing. In around more than 2.3 million combing operations, conducted under the National Action Plan, Pakistan convicted 62 persons and filed over 750 cases against operators of AQ, JUA, SSP, JeM, LeJ, ASWJ, FIF, JuD and Daesh in the past 18 months under terror financing charges by putting top leadership of FIF, JuD and JeM in jails.

The Anti-Narcotics Force of Pakistan has signed 33 MoUs with other jurisdictions where it sent 50 LoRs and received only 2 from other jurisdictions. Pakistan customs authorities have had 22 MoUs with customs administrations where Islamabad sent 11 requests to Afghanistan, two to China and one request to the UAE. Further terror financing investigations are targeting persons affiliated with designated/proscribed entities including Daesh (76 cases), TTP (228), JuD/FIF (85), JeM (172), TTA (9), LeT (12) and JeM (2).

Implementing FATF’s recommendations, the authorities have confiscated all 150 properties of JuD and 36 terrorist financing cases were registered against trustees as well. Operations revealed details of properties and cases linked to JuD/FIF (properties 15, 6 cases), Al-Anfaal Trust, Lahore (properties 72, 15 cases), Al Dawat-ul-Irshad, Pakistan (10 properties, 5 cases, Al-Hamad Trust, Lahore/Faisalabad (Four properties, Two cases), Mosques & Welfare Trust (4 properties/cases, Al Madina Foundation, Lahore (2/2 properties/cases, Maaz Bin Jabal Educational Trust, (2 property/case) and Idara-i-Khidmat-i-Khalq (42/01 cases/properties). Pakistani authorities recovered some Rs1.2 billion linked to operators of Daesh, TTP, AQ, JuD, JeM, LeT, TTA, TTP, etc., and filed cases against them.