How Pakistan turned around FATF?
Following its inclusion in FATF Grey list in 2018, Pakistan had embarked on a massive diplomatic campaign to vindicate its stance. Pakistan while maintaining the tradition of international compliance proved to be a responsible state by implementing all the points of the action plan put forth by FATF. The Armed Forces of Pakistan played a central role in this and together with the government and national institutions ensured the implementation on all the points.
Pakistan’s image has technically improved and FATF itself has already acknowledged Pakistan’s progress over the systematic deficiencies related to terror financing and money laundering. India with its malicious designs tried to blacklist Pakistan at all costs but Pakistan Army foiled this conspiracy by charting out a comprehensive plan of action. Under supervision of Core Group formed at Pak Army Headquarters at GHQ, action on 27 out of 27 points of terror financing and 7 out of 7 points of money laundering was ensured by constantly working with around 30 governmental agencies. The FATF two action plans together contained 34 points in total. After consulting the government in this regard, on the orders of the Chief of Army Staff, a special cell headed by DGMO was set up in GHQ in 2019.
When the GHQ cell took over this task, there was slight progress on only 5 points of FATF Action Plan. This cell created coordination mechanism between more than 30 departments, ministries and agencies and developed a complete action plan on each point. The GHQ-based cell worked day and night tirelessly to develop an effective strategy for money laundering and terror financing, which led to the success of the FATF. It is pertinent to mention here that Pakistan completed its 2021 Action Plan before the timelines set by FATF, i.e. January 2023. While FATF has announced Pakistan’s compliance on all 34 action items of the plan, its team will soon conduct an ‘onsite visit’ to check the sustainability of Anti Money Laundering (AML) and Counterterrorism Financing (CFT) systems in Pakistan by September 2022. It is important to note that more than 800 cases of money laundering had been reported in Pakistan and investigations of those cases have been completed in the last 13 months. As per the FATF plan, the reporting cycle showed a significant increase in the number and value of assets seized, with 71% of assets being seized and 85% of assets being valued. The established cell has prepared Terror Financing Risk Assessment from the very beginning of the new action plan in which Pakistani authorities were given complete information about Terror Financing in various sectors, products and liaison as well as high risk areas. The FBR completed offsite surveillance of more than 1,700 different illegal businesses, as well as bringing the real estate sector under the purview of the law. The Securities and Exchange Commission of Pakistan (SECP) has also completed enforcement action. The Securities and Exchange Commission of Pakistan reviewed 146,697 cases and imposed fines of Rs 2,388 million. Money laundering (ML) investigations have also increased by 123% in the last one year.
FATF has been both a blessing and a warning for Pakistan to take stock of its structured mechanisms to address the loopholes. Had Pakistan been blacklisted, there is no denying the fact that given its current economic woes, it would have been in serious trouble. IMF Program would have ended along with remittances being severely affected, Foreign investments would have been frozen with economy in a nosedive situation. Though the country had to pass through tough times for the last four years, however, it also came as a blessing for Pakistan. It made the state realize to take serious measures against money laundering with proper legislations and putting in place effective anti terror financing & ML mechanisms. The state undertook reforms that tremendously forged a new direction for the future of the country by dumping the baggage we have been tugging since decades.
Pakistan is hopeful of egressing FATF’s grey list soon because FATF itself has acknowledged the country’s genuine efforts and compliance on its action plan.