Pakistan's Efforts To Get Out Of FATF Grey List And The Way Ahead

Ayesha Meer and M.A. Farouq

The Financial Action Task Force (FATF) has announced its “joint working group meeting” of the Eurasian group by the end of this month (June 2020). Pakistan has been provided with enough time (owing much to Covid-19 pandemic) to comply with FATF’s 40 recommendations in an all-inclusive framework to restrict money laundering and curb terror financing comprehensively in order to come out of the grey list. Without any doubt, Pakistan has made efforts to implement FATF recommendations at all levels and played a key role in making the entire peace process and US-Afghan reconciliation possible.

It is also pertinent to mention here that the price paid by Pakistan as a US ally for peace in Afghanistan is 70,000 lives and a huge economic loss, which beckons to the fact that Pakistan is not harbouring terrorism rather it’s a victim of terrorism. The Global Terrorism Index, 2017 by the Institute for Economics and Peace (an independent, nonpartisan, nonprofit think tank) ranks Pakistan as the “fifth most affected country” from terrorism behind Iraq, Afghanistan, Nigeria and Syria. It’s also worth noting here that the ICRG report reckons that Pakistan has already taken substantive measures in compliance with the FATF recommendations, which are intended to be implemented at the national level through legislation and other legally binding measures. But, this recognition by ICRG has not been duly acknowledged because of the “political truth” based scenarios at the national and international level. Though it is not out of box to mention here that many steps may be taken, particularly to combat money laundering and terror financing, as part of the ongoing process.

In order to get its measures acknowledged and combat money laundering and terror financing, Pakistan must devise a strong strategy and take strict actions. First of all, Pakistan needs to put its case incisively before FATF coupled with strong persuasive diplomatic policy, and make strong manoeuvring to control the affairs though it has some deficiencies in the legal and administrative framework. The National Action Plan must be executed in letter and spirit. The operational mechanism of NACTA and other federal agencies should be improved and must be tackled with due diligence. NACTA should initiate different programmes in light of NAP to coordinate with police, intelligence, prosecution and judiciary. Financial institutions must focus on AML measures regarding foreign remittances, visa transfers, tax evasion, corruption, and trade in counterfeit goods and narcotics trafficking.

Policies must be devised to monitor remittances and transactions. A separate cell under FIA should be set up to track suspicious transactions. LEAs and investigation authorities must be kept free from all sorts of pressure and must be allowed to exercise their powers without any hindrance. They should be provided access to all essential and required documents. Domestic laws must be friendly and compatible with international standards. Cooperation and timely response to request of foreign countries for investigation, prosecution, extradition and confiscation of property of any person involved in ML & TF is highly recommended. Tax amnesty schemes should be launched cautiously so that these schemes may not be used by shady elements only to legalise their unreported assets. These schemes should manage the circulation of money in society at large. Pakistan should try at its utmost level to qualify for the membership of “Egmont Group’’. Also, the Pakistani government must be efficient to couple its foreign strategic policy with the US-Taliban peace agreement to get itself out of the grey list and also redesign the country’s foreign policy keeping in view its geostrategic location.

Pakistan needs to improve the Cooperative Societies Act, 1925 with reference to transparency and Beneficial Ownership of Legal Persons. A legal and administrative framework is required for cross audit of funding related to Madrassas and NGOs. The government must take some more steps to regularise Madrassas under the Ministry of Education like other educational institutions. A consistent, irreversible and sustainable policy is required at the national level to defeat and hammer the out of control elements. The government needs to build compatible investigating authorities and an effective regulatory system to snare financial crime in cyberspace. Pakistan should take devoted measures to prevent, deter, pre-empt and respond to terrorism. More laws must be developed in the spirit of counterterrorism like the National Counter Terrorism Centre, The Patriotic Act and much more in the United States. There must be some functionary having a sustainable independent audit authority with legal dominion for exchange companies and other legal entities. FMU needs to maintain comprehensive statistics concerning investigations and prosecutions conducted in relation to ML & TF. The reintegration programme of Peaceful Balochistan Package must be applied in a favourable manner with the aim to provide incentives to Bloch insurgents to quit violence and be the integrated part of the society. The Pakistani government must couple its foreign policy vis-à-vis the US-Taliban peace agreement with its removal from the grey list and also redesign country’s foreign policy by keeping in view the country’s geostrategic location. Pakistan should make efforts to make a strong lobby with other member countries to get out of the FATF grey list.

Last but not least we must go for a more effective, practical and end user friendly banking system where everything and every transaction must be digitalised. All individuals should have bank accounts for transaction of their money.

In order to implement the National Action Plan and have Pakistan’s name removed from the grey list of the FATF, the incumbent government should have all its security, intelligence and financial institutions work in unison to eliminate any support (financial or intellectual) to the banned outfits.

Ayesha Meer is a law student with expertise in accounting and finance, an independent researcher and a human rights activist. She is currently studying Criminology and Security Studies at the University of Punjab. 

M.A. Farouq is a Lahore-based practicing lawyer with expertise in ADR.