Pakistan will have to demonstrate its compliance on FATF conditions by May 2019 in order to avoid falling into the blacklist

PARIS (France): The Financial Action Task Force (FATF) in its last plenary meeting held in Paris has added three more conditions for Pakistan till May 2019 for the Islamic nation to avoid falling into the blacklist.

The additional conditions, apart from 15 major demands (out of the 27-step-process) for the May-related deadline for Pakistan are:

(1) revising/updating Pakistan’s national risk assessment on terror financing,

(2) improving Federal Bureau of Revenue (FBR)’s customs report on cash couriers to curb currency smuggling


(3) placing inter-agency cooperation mechanism among law enforcing agencies at federal and provincial levels.

So now, the FATF will gauge the Pakistani performance on a total of 18 conditions in the coming FATF meeting expected to be held in Colombo in June.

The following are the existing (prior to the three new additions) demands from Pakistan:

1) The FATF asks Pakistan to conduct ongoing outreach to financial institutions to promote a clear understanding of their AML/CFT obligations and terror financing risks.

2) In May 2019, the State Bank of Pakistan (SBP) will have to demonstrate that supervisory activities including on-site and off-site examination are applied on a risk-sensitive basis to financial institutions.

3) The SBP and SECP will have to demonstrate that remedial actions and effective, proportionate and dissuasive sanctions are being applied in cases of violations of AML/CFT requirements and failing in TF risk management.

4) Pakistan will have to demonstrate that competent authorities are cooperating and taking actions to identify and sanction illegal Money or Value Transfer Service (MVTS) to mitigate the risk of misuse by designated persons and entities (for example closing down illegal MVTS and prosecuting the operators).

5) The FBR), Pakistan, will have to demonstrate that authorities are pursuing domestic and international cooperation to identify cash couriers and enforce controls on the illicit movement of currency.

6) The Nacta will have to establish and implement a policy for all responsible law enforcing agencies (LEAs) to proactively initiate financial inquiries and investigation of terrorist groups and their members; and make reactive parallel financial inquiries or possible investigation a part of every terrorism investigation.

7) The Financial Monitoring Unit (FMU), Pakistan, will have to proactively request and provide international cooperation in cases of targeting, investigating and prosecuting terror financing cases.

They will have to demonstrate that this has included police to police, custom to custom and FIU to FIU for formal cooperation under Mutual Legal Assistance (MLA). FMU has so far signed MoU with Iran, Turkey, Turkmenistan and Sri Lanka for exchange of information on money laundering, terrorism financing and related criminal activities in a spirit of cooperation and mutual interest.

8) Pakistan will have to demonstrate activities to enhance capacity and support for prosecution and the judiciary involved in terror financing cases.

9) Pakistan will have to present technical compliance to demonstrate a comprehensive legal obligation to target financial sanctions without delay and Ministry of Foreign Affairs had recently complied to this condition to issue Statutory Regulatory Offers (SRO) to this effect.

10) The SBP will have to demonstrate further risk based outreach to FI/non-profit organisations (NPOs) to ensure they understand and comply under 1267 and 1373 UN Security Council Resolutions.

11) Pakistan will have to take immediate action to implement terror financing against designated persons and entities. This includes screening against their customer base and ongoing transaction monitoring by the regulators and law enforcing agencies.

12) Pakistan will have to demonstrate effective implementation of terror financing against assets of 1,267 and 1,373 designated persons and affiliates including Daesh, al-Qaeda, FIF, JuD, LeT, JeM and HQN.

13) Pakistan will have to show enforcement against violations with terror financing under UNSCR of 1,267 and 1,373 including asset freezing and prohibition on providing funds and other financial services and provide case examples to support the cooperation. In this regard, the country will have to demonstrate with evidence the administrative penalties that have been enforced over a two year period.

14) Pakistan will have to demonstrate that the facilities and services owned or controlled directly or indirectly by designated persons and entities (and those acting on their behalf of or at their direction) are deprived of resources and the usage thereof (i.e. shut down or effectively taken over by the government or by reputable civil society organisation).

This should include ensuring that the individuals affiliated with designated persons and entities are no longer in control directly or indirectly of the facilities or their activities and continuing public awareness campaign of freezing action taken for facilities and services owned or controlled be designated persons.

15) Pakistan will have to demonstrate that authorities are applying focused measures to such NPOs which Pakistan identified as being vulnerable to terror financing abuse in line with risk based approach.