FATF regional group keeps Pakistan on its 'Enhanced Follow-up List'

A regional affiliate of the Financial Acton Task Force (FATF) asked the country to strengthen its implementation of anti-money laundering and combating terror financing measures

A regional affiliate of the Financial Acton Task Force (FATF) has retained Pakistan on the ''Enhanced Follow-up'' list and asked the country to strengthen its implementation of anti-money laundering and combating terror financing measures.

The FATF Asia Pacific Group on Friday released a second Follow up Report (FUR) on the Mutual Evaluation of Pakistan on the compliance of 40 technical recommendations.

The report said Pakistan was re-rated to 'compliant' status on five counts and on 15 others to 'largely compliant' and on yet another count to 'partially compliant, Dawn reported.

The two recommendations on which Pakistan was downgraded to 'non-compliant were 37 and 38 due to "insufficient progress" and pertained to mutual legal assistance (MLA) with other countries and freezing and confiscation of assets and accounts.

"Pakistan will move from enhanced (expedited) to enhanced follow-up, and will continue to report back to the APG on progress to strengthen its implementation of anti-money laundering and combating financing terror (AML/CFT) measures," the APG said.

It is pertinent to note that the development comes only a few weeks ahead of a meeting of the FATF --the Paris-based global watchdog-- to decide on Pakistan's grey list status.

The 41-member APG in August 2019 had downgraded Pakistan''s status to the ''Enhanced Follow-up'' category from the ''Regular Follow-up'' over technical deficiencies to meet normal international financial standards by October 2018.

The APG has noted that Pakistan has taken positive steps in enacting the new Mutual Legal Assistance Act 2020 (MLAA) and establishing MLA processes and timeframes.

However, it added, that the "restrictive conditions" imposed on the provision of MLA through the new requirement to inform the subject of any request to restrain or confiscate assets is a significant deficiency that prevents Pakistan from maintaining theconfidentiality of requests and undermines its ability to act expeditiously.

Pakistan has been on the FATF's grey list since June 2018.

Global terror financing watchdog, FATF, in February this year, had retained Pakistan on its "grey list" till June after concluding that Islamabad failed to address its strategically important deficiencies, to fully implement the 27 point action plan that the watchdog had drawn up for Pakistan.

Pakistan's continuation on the 'grey list' means that it will not get any respite in trying to access finances in the form of investments and aid from international bodies including International Monetary Fund (IMF).

Pakistan is facing the difficult task of clearing its name from the FATF grey list. As things stand, Islamabad is finding it difficult to shield terror perpetrators and implement the FATF action plan at the same time.

Early this year, Islamabad-based think tank Tabadlab revealed that Pakistan sustained a total of USD 38 billion in economic losses due to FATF' decision to thrice place the country on its grey list since 2008.

The research paper titled "Bearing the cost of global politics -- the impact of FATF grey-listing on Pakistan's economy" states that that grey-listing events spanning from 2008 to 2019, may have resulted in total GDP losses worth USD 38 billion.