ISLAMABAD: The Asia Pacific Group (APG) on Money Laundering has improved Pakistan’s rating on four of the 40 Technical Recommendations of the Financial Action Task Force (FATF) Against Money Laundering and Terror Financing (AML/CFT), but called it ‘ Enhanced’ is retained. Follow up to meet outstanding requirements.
“There are 35 recommendations in Pakistan which have been given compliance or large-scale compliance (C/LC) status. “Pakistan will remain on advanced follow-up, and will continue to report back to the APG on progress to strengthen the implementation of AML/CFT measures,” APG, a regional affiliate of the Paris-based FATF, announced.
Overall, Pakistan is now fully ‘compliant’ with eight recommendations and ‘substantially compliant’ with 27 others, according to the Third Follow-up Report (FUR) on Mutual Assessment of Pakistan released by the APG. The re-rating for compliance status was up a notch and three others were largely in compliance status.
The country is ‘partially compliant’ with three recommendations as compared to seven in June this year and ‘non-compliant’ with two of the total 40 recommendations (unchanged against June). Overall, Pakistan is now in line with or largely compliant with 35 of the 40 FATF recommendations.
The APG said, “Pakistan has made good progress in addressing the technical compliance deficiencies identified in its Mutual Assessment Report (MER) and has re-rated it at R.10, R.18, R.26 and R.34.” Has gone.”
As such, Pakistan showed satisfactory progress on a recommendation and advanced for compliance. This reassessment occurred when Pakistan introduced wider AML/CFT obligations to the Central Directorate of National Savings (CDNS) and the entities that provide financial activities previously provided by Pakistan Post, similar AML/CFT to other SBPs and SECPs. are subject to obligations. regulated persons. Microfinance Banks (MFBs) and Exchange Companies (EC) are also now subject to the same AML/CFT obligations as other SBP regulated individuals.
Similarly, three cases where Pakistan was reassessed from ‘partially compliant’ to ‘largely compliant’ status pertained to recommendations 18, 26 and 34. The recommendation is about screening of employees and employees belonging to 18 financial institutions, CDNS, MFBs and ECs. Etcetera.
This means that Pakistan also addressed the deficiencies with respect to employee screening requirements for banks and DFIs with the new nine provisions in the SBP and SECP Regulations. Amendments have been passed to the CDNS and Pakistan Post Regulations to provide for enforceable AML/CFT requirements. However, minor shortcomings remain with the SBP regulation coverage of requirements for financial groups.
On Recommendation 26, the APG noted that deficiencies remain with respect to obligations to financial groups and a lack of clear provisions for SBP to revise risk assessments of REs or financial groups in response to developments in their management and operations. Is. There will be a hiatus with Pakistan Post until the transfer of its commercial banking ends. However, it was re-rated in the category of massive compliance.
Similarly, on R-34, the APG stated that Pakistan conducted a number of guidance and feedback sharing sessions with RE to support the implementation of its obligations, which largely aligns with ML/TF exposure. Minor deficiencies remain with respect to limited sector specific feedback and guidance issued to lawyers and the quality of red flag indicators issued to REs, but were largely re-evaluated for compliance.
The reporting date for this assessment was February 1, 2021, which means Islamabad may have made further progress since then which will be assessed at a later stage. In February 2021, Pakistan submitted its third progress report, requesting a re-rating to R.10, 18, 26 and 34. The APG welcomed the steps taken by Pakistan to improve technical compliance with all the four recommendations.
Hammad Azhar, who heads the task force on the finance ministry and the FATF, separately welcomed the reappraisal, saying Pakistan was well placed in technical compliance compared to many other countries. For example, if the position of Pakistan is compared with that of G20 countries, Pakistan ranks fourth after Italy (38), Kingdom of Saudi Arabia (38) and United Kingdom (38).
“Pakistan is now ranked at the top of countries that have achieved C/LC ratings for more than 35 out of 40 FATF recommendations,” the finance ministry said. The six key recommendations of the FATF are money laundering crimes, terrorist financing crimes, targeted financial sanctions related to terrorism and terrorist financing, customer due diligence, record keeping and reporting of suspicious transactions.
Pakistan will continue this momentum to address the remaining gaps identified in the MER-2019 and seek upgrades in the remaining five recommendations, in the fourth follow-up report, the finance ministry said.
Pakistan’s MER was adopted in August 2019 giving the country compliant and large-scale compliant status in 10 out of 40 FATF recommendations for technical compliance.
Published in Dawn, August 14, 2021
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