The Paris-based Financial Action Task Force (FATF) has retained Pakistan on its “Grey List” for failing to meet some additional criteria. The global money laundering and terrorist financing watchdog has also added UAE to its “Grey List”.
Pakistan’s Retention
Pakistan has been on FATF’s “Grey List” since 2018 for failing to check money laundering, leading to terror financing. It had made a high-level political commitment to work with the FATF and APG (Asia Pacific Group on Money Laundering) to strengthen its anti-money laundering/combating the financing of terrorism (AML/CFT) regime and to address its strategic counter-terrorist financing-related deficiencies back in 2018. As per reports, Pakistan was given a plan of action to be completed by October 2019. Failure to complete all the action items on the “Action Plan” has led to the country being on the “Grey List” for so long.
The FATF said, “Since June 2021, Pakistan has taken swift steps towards improving its AML/CFT regime and completed six of the seven action items ahead of any relevant deadlines expiring, including by demonstrating that it is enhancing the impact of sanctions by nominating individuals and entities for UN designation and restraining and confiscating proceeds of crime in line with Pakistan’s risk profile”. They added, “Pakistan should continue to work to address the one remaining item in its 2021 action plan by demonstrating a positive and sustained trend of pursuing complex (money laundering) investigations and prosecutions.”
Pakistan’s Energy Minister Hammad Azhar, in a statement said that Pakistan will fulfill both the remaining FATF action plans soon. As per reports, Pakistan is now aiming to fully comply with the 2021 action plan on anti-money laundering and combating terror financing by the end of January 2023.
Pakistan has so far avoided being on the black list with the help of other nations like China, Turkey and Malaysia. Recently, the IMF had asked Pakistan to fulfill the “Action Plan” and promptly address the identified deficiencies related to money laundering and terror financing.
UAE’s Addition
The decision to add UAE to FATF’s “Grey List” came on Friday over concerns that the country was not doing enough to tackle illicit financial flows. The watchdog said that although UAE had done “significant progress”, it still needed to do more to tackle issues of terrorism financing, money laundering, confiscating criminal proceeds and engage in international cooperation.
FATF’s 2020 evaluation had called for “fundamental and major improvements” by the UAE. As per reports, UAE addressed or largely addressed more than half of the key recommended actions from the mutual evaluation report
The FATF said, “The Gulf state must now demonstrate progress on facilitating international anti-money laundering investigations, on managing risks in certain industries including real estate agents and precious stones and metal dealers, and on identifying suspicious transactions in the economy.”
Other areas for improvement include using financial intelligence against money laundering, increasing investigations and prosecutions of money laundering cases “consistent with UAE’s risk profile”, and proactively identifying and combating sanctions evasion.
The UAE, in a statement, said that it had a strong commitment to work with FATF. They said, “Robust actions and ongoing measures taken by the UAE government and private sector are in place to secure the stability and integrity of the country’s financial system.”
