According to the recent report, the Asia Pacific Group (APG) on Money Laundering has improved Pakistan’s rating on 31 of the 40 technical recommendations of the Financial Action Task Force (FATF) against money laundering.
The regional affiliate of the Paris-based FATF released the second Follow-Up Report (FUR) on Mutual Evaluation of Pakistan, where the IGO downgraded Pakistan on one of the 40 criteria.
This comes as the country had requested the APG to upgrade the country’s compliance status on at least 23 of the 40 global recommendations of the FATF, as per the second mutual evaluation follow-up report.
The APG accepted Pakistan’s stance on 22 recommendations, some of them “critical” including compliance with the UNSC resolutions, tightening of the weapons of mass destruction-related controls, actions against politically exposed persons and plugging loopholes for money laundering.
However, on one condition, the Mutual Legal Assistance (MLA) agreement, the APG has downgraded Pakistan to “non-compliant” from “partial compliant”.
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The document read, “The APG welcomes the steps that Pakistan has taken to improve its technical compliance. Pakistan has been re-rated on Recommendations: 14, 19, 20, 21 and 27 (to C); 1, 6, 7, 8, 12, 17, 22, 23, 24, 25, 30, 31, 32, 35 and 40 (to LC); and 28 (to PC). However, insufficient progress has been made to justify a re-rating of R.38, and R.37 has been re-rated to NC following the implementation of a new law which imposes restrictive conditions on the provision of mutual legal assistance (MLA).”
This improvement would make Pakistan’s case stronger in the upcoming FATF plenary by the Paris-based global financial watchdog that will decide whether to remove Pakistan from the grey-list.
According to the Minister for Energy, Hammad Azhar, who is also Pakistani government’s point man on the Financial Action Task Force, “Pak has achieved compliant rating in 31 out of 40 FATF recommendations (MER technical compliance).”
He further added, “This is the parallel scrutiny being undertaken at FATF besides our current action plan. Upgrade of 20 criteria in less than 2 years is unprecedented in FATF history for any country.”
He explained that this outcome is a result of major legal reforms (14 federal + 3 provincial laws with corresponding regulations). It is also due to the untiring efforts of the entire FATF team (20 ministries plus organisations).
Pak has achieved compliant rating in 31 out of 40 FATF recommendations (MER technical compliance). This is the parallel scrutiny being undertaken at FATF besides our current action plan.
Upgrade of 20 criteria in less than 2 years is unprecedented in FATF history for any country.— Hammad Azhar (@Hammad_Azhar) June 4, 2021
The Finance Ministry on 4th also said that these results were a “manifestation of the irreversibility and sustainability of the complete process in bringing Pakistan at par with Global AML/CFT standards”.
“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.
Pakistan submitted its third progress report in February 2021 and is yet to be evaluated.
It must be mentioned that in the first FUR that came out in February 2020, Pakistan’s progress was largely found unchanged — non-compliant on four counts, partially compliant on 25 counts and largely compliant on nine recommendations. Since then, the government worked aggressively and improved its effectiveness on Anti-money laundering and combating financing terror measures.
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Concluding Recommendation 37, APG said, ”Having considered the nature and scope of the remaining gaps, and Pakistan’s risk and context, these gaps have been given major weight in determining the final rating”. Similarly, in Recommendation 38, APG said, “This deficiency is given significant weight, noting the risk and context of Pakistan, including the risks of cross border ML, TF and predicate offences.”
Thus, both recommendations 37 and 38 were considered NC or Non-Compliant by the FATF’s regional body APG.