Pakistan facing intricate terrorism financing situation

Nahla Abdelmonem

Pakistan has prepared its compliance report for the FATF’s crucial plenary meeting, which is scheduled to be held in French capital Paris from October 12 to October 15.

During the meeting, the global anti-money laundering watchdog will give its decision on the country’s ‘grey list’ status.

Meanwhile, the Asia Pacific Group (APG) said Saturday that chances are high that Pakistan will be retained on the ‘grey list’.

It noted that the country has complied with just one the 40 recommendations set by the global anti-money laundering watchdog at the time of the country’s inclusion in the list.

Pakistan was placed on the grey list by the Paris-based watchdog in June last year and was given a plan of action to complete it by October 2019, or face the risk of being placed on the black list with Iran and other countries.

The APG said in its ‘Mutual Evaluation Report’ that out of FATF’s 40 recommendations on curbing money laundering and combating the financing of terrorism, Pakistan was fully compliant only on one.

It was largely compliant on nine, partially compliant on 26 and non-compliant on four recommendations.

According to the Pakistani Daily, Express Tribune, a report finalized by the Securities and Exchange Commission of Pakistan (SECP) has said that the comprehensive guideline developed by the Commission has helped financial institutions to generate 219 Suspicious Transactions Reports (STRs) in one year, as compared to 13 STRs in eight years.

The SECP has conducted 167 inspections, focusing on AML/CFT (Anti-Money Laundering/Combating Financing of Terrorism) compliance in the cases of 72 securities brokers, 27 non-banking financial companies, 13 insurance companies and 55 high risk non-profit organisations, it said.

The SECP report has said that apart from penalties imposed for non-compliances with the said regulations, the financial institutions have also undertaken remedial measures to ensure effective compliance with the regulations.

It said automated screening software has been deployed by many financial institutions to screen the proscribed persons and the regulated entities now also have access to the Go AML system of the State Bank of Pakistan’s (SBP) Financial Monitoring Unit (FMU) for online filing of STRs.

According to the report, the SECP has made transition from one-size-fits-all to a risk-based approach to implement a consolidated AML/CFT regulatory framework in its regulated financial sector.

Further to effectively identify assess and understand the Money Laundering/Terror Financing (ML/TF) risks that Pakistan faces, a National ML/TF Risk Assessment has been undertaken in 2019 to assess ML/TF vulnerabilities that are inherent within the financial sector including banking, NBFCs, brokers and insurance.

The SECP has said that the FMU is collaborating with stakeholders including ministries, law enforcement agencies, SBP and SECP to implement the control mechanism to check potential abuse by money launderers and terrorist financiers.

The report has said that continuous awareness campaigns and efforts have resulted in improvement in compliance level by the regulated entities.