FATF warns Pakistan as it fails on 22 out of 27 action plan

The Financial Action Task Force (FATF) has expressed its displeasure over Pakistan's inaction in fighting terrorism extending its grey list status with warnings of further action if the country fails to comply with the action plan suggested. The new deadline for Pakistan is February 2020 before which it has to act on the recommendations of the FATF, failure to which might get it blacklisted.

While Pakistan had claimed that it had made serious efforts towards combating terrorism, it has failed to convince the FATF members who have once again placed the country on grey list raising serious questions over its preparations and commitment to fight terror financing. Presided by china, the plenary meeting of the FATF concluded that Pakistan has not solved its strategic deficiencies. Following the meeting, the global terror finance monitoring body has asked Pakistan to take the following actions.

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Adequate Demonstration

The FATF has asked Pakistan to demonstrate “its proper understanding of the TF risks posed by the terrorist groups”, and that the authorities should “identify and take action against illegal money”. It said that law enforcement agencies should identify the terror finance activities and those related to such activities should be properly investigated.

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Identifying Money Movement

The group stressed that Pakistan should sincerely work towards identifying the flow of money and take action to prevent the “illicit movement of currency” in its economy. Highlighting the lack of coordination between the agencies it asked Pakistan to improve “inter-agency coordination including between provincial and federal authorities on combating TF risks”.

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Effective Implementation

The recommendations by the group also brought to attention the lacunae in the implementation of its targets. It asked Pakistan to take actions “against all 1267 and 1373 designated terrorists and those acting for or on their behalf” and prevent them from “raising and moving of funds” as well as “identifying and freezing assets”. It also asked the Imran Khan government to ensure that the “designated person are deprived of their resources and the usage of the resources”. Out of the 27 action plan which the country was supposed to work on, it could only address only five of them attracting criticism from the group. “The FATF strongly urges Pakistan to swiftly complete its full action plan by February 2020,” it said.

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What happens next?

If Pakistan repeats its current performance then there is every possibility that it could be blacklisted. Being on the blacklist means the country would find it almost impossible to get funding cooperation from organisations like World Banks and IMF. Warning Pakistan, the FATF said that lack of “significant and sustainable progress” will force them to “take action, which could include the FATF calling on its members and urging all jurisdictions to advise their FIs to give special attention to business relations and transactions with Pakistan”. It means that cash strapped country will face a tough time.