Pakistan faces the serious threat of being black-listed by the Paris-based Financial Action Task Force (FATF) for not doing enough to combat terror financing.
Not Impressed with the progress made so far by Islamabad, a visiting delegation of FATF has asked Pakistan to do more to strengthen its legal framework if it wants to avoid being black-listed by the anti-money laundering watchdog.
According to the Pakistani media, the FATF team apparently found the legal framework insufficient and the institutional arrangements weak. The delegation feared that the set-up installed for scrutinising the activities of non-profit organisations, brokerage houses, exchange companies and donations of corporate entities — registered under the companies act — was not robust enough.
The FATF team believed that even in areas where the legal framework appeared vigorous, the implementation mechanism was not geared to track down financial flows of the entities in question because the agencies involved were not well-connected. This weakness was prominent in real estate brokerages where large business transactions remained outside the ambit of legal records.
It also noticed shortcomings in commodity trading — and the effectiveness of laws against money laundering through cross-verification of service providers.
Unidentified sources were quoted as saying that the delegation asked the relevant authorities to issue deadlines for resolving the flagged weaknesses so that the problems could be remedied and future performance evaluations are made on the proposed matrix.
The authorities would also have to properly record the number of donation boxes placed by religious and other organisations at restaurants and business centres among other places. Besides, all currency and real estate dealers would have to record every transaction — both small and large.
The purpose of the team’s visit was to assess the effectiveness of Pakistan’s Anti-Money Laundering and Counter Financing of Terrorism regime under FATF methodology.
In June, Pakistan made a political commitment to work with the FATF to address its strategic counter-terrorism financing-related deficiencies by implementing a 10-point action plan. The successful implementation of the plan and its verification by the APG is a prerequisite for the FATF to remove Pakistan from its greylist.