The Financial Action Task Force (FATF) on Friday retained Pakistan in its “grey list” for failing to adequately investigate and prosecute senior leaders and commanders of UN-designated terrorist groups.
The decision was announced at the conclusion of the multilateral watchdog’s five-day virtual plenary meeting under the German presidency of Marcus Pleyer. However, FATF noted that Pakistan had completed all but one of the 27 items in the action plan drawn up for the country to tackle money laundering and terror financing when it was placed in the list of nations under increased monitoring or the grey list in 2018.
“The FATF encourages Pakistan to continue to make progress to address as soon as possible the one remaining CFT (counter-terrorist financing)-related item by demonstrating that TF (terrorist financing) investigations and prosecutions target senior leaders and commanders of UN designated terrorist groups,” the body said in an announcement.
Experts pointed out the sole remaining action item was significant as Pakistan has given few indications that it plans to investigate and prosecute leaders and commanders of all the eight terror groups that have been named by FATF in the past – the Taliban, Haqqani Network, Lashkar-e-Taiba (LeT), Jaish-e-Mohammed (JeM), Jamaat-ud-Dawah (JuD), Falah-e-Insaniyat Foundation, al-Qaeda and Islamic State.
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So far, Pakistani authorities have only investigated and prosecuted senior leaders of the LeT and JuD, including LeT founder Hafiz Saeed and several of his senior aides. Saeed and a few of his aides are currently serving sentences given to them after they were found guilty in a string of terror financing cases last year.
However, no action has been taken against leaders of the JeM, such as its chief Masood Azhar, despite the group being linked to several high-profile terror attacks in recent years, or the Afghan Taliban, which has stepped up fund raising on Pakistani soil in recent weeks against the backdrop of the withdrawal of US and NATO forces from Afghanistan.
FATF said Pakistan should continue addressing “strategically important” deficiencies in its anti-money laundering and counter-terrorist financing regimes by enhancing international cooperation by amending the country’s mutual legal assistance (MLA) law and demonstrating that assistance is being sought from foreign countries in implementing designations under UN Security Council resolution 1373.
Pakistan should also demonstrate that “supervisors are conducting both on-site and off-site supervision commensurate with specific risks associated with DNFBPs (designated non-financial businesses and professions), including by applying appropriate sanctions where necessary” and that “proportionate and dissuasive sanctions are applied consistently to all legal persons and legal arrangements for non-compliance with beneficial ownership requirements”, the watchdog said.
FATF said Pakistan must also demonstrate an increase in money laundering investigations and prosecutions, and that proceeds of crime continue to be restrained and confiscated in line with the country’s risk profile, including working with foreign counterparts to trace, freeze and confiscate assets, and that DNFBPs are being monitored for “compliance with proliferation financing requirements and that sanctions are being imposed for non-compliance”.
The watchdog noted that “Pakistan’s continued political commitment has led to significant progress across a comprehensive CFT action plan”.
FATF recognised Pakistan’s progress and noted that since February this year, the country “has made progress to complete two of the three remaining action items on demonstrating that effective, proportionate and dissuasive sanctions are imposed for TF convictions and that Pakistan’s targeted financial sanctions regime was being used effectively to targeted terrorist assets”.
