An international delegation monitoring Pakistan's commitments to the Paris-based global financial watchdog, Financial Action Task Force (FATF), has urged Islamabad to make terror financing and money laundering extraditable offences, a media report said on Thursday, 16 August.

The inter-governmental organisation, Asia Pacific Group (APG) on Money Laundering, which is currently in Pakistan, will submit a report to FATF which placed Pakistan on its 'grey list' in June 2018.

The APG’s Mutual Evaluation report can play a critical role in retaining or removing Pakistan from the list after September next year.

Islamabad needs to comply with a 10-point action plan it committed to the FATF in June, by September-end next year. The plan’s agenda is to combat terror financing and money laundering to get out of the grey list or further fall to the black list.

Placement on the grey list hurts a country's economy as well as its international standing. On 15 August, The Express Tribune reported that the delegation urged Pakistan authorities to enact appropriate laws, enabling local officials to act upon requests of foreign countries to freeze illegal assets and extradite those involved in financing terror and money laundering.

The delegation met officials of the Financial Monitoring Unit (FMU) of the State Bank of Pakistan, Securities and Exchange Commission of Pakistan (SECP), National Counter Terrorism Authority (Nacta), Federal Investigation Agency (FIA) and representatives of the ministries of foreign affairs and interior.

Highlighting deficiencies in Pakistan’s legal framework, the visiting APG team pointed out that this could hamper Pakistan’s effective response on requests of mutual legal assistance by foreign countries in money laundering cases, officials said.

Pak Needs to Strengthen Domestic Legal Framework

APG members said the country needs to strengthen its domestic legal framework by October, after which the regional body will conduct an on-site inspection.

It also urged the authorities concerned to predicate offence-monitoring powers to the Securities and Exchange Commission of Pakistan (SECP) and National Accountability Bureau (NAB).

The group’s other areas of concerns were activities by non-profit organisations, narcotics trafficking and proceeds of crimes.

The team comprises officials from the US, Turkey, China and the UK. Officials from the US Treasury and the UK's New Scotland Yard are part of the delegation.

Discussions are taking place on technical grounds where Pakistani authorities are trying to address the APG's concerns.

During its third day of visit, the AGP team discussed the status of implementation of the FATF recommendations on supervision of financial institutions, challenges posed by beneficial ownerships and trusts, the targeted financial sanctions against terrorism, proliferation of weapons of mass destruction, mutual legal assistance and extradition.

After discussions, the AGP will prepare the second draft of technical compliance report before October, which can be improved upon during the mutual evaluation on-site visit, scheduled for October.

Pakistani authorities were of the view that each department had its own mutual legal assistance arrangement, which could meet the needs of other countries. However, they said this did not fully persuade the APG team.

Pakistan is also not a signatory to mutual legal assistance treaties with countries such as the US, the UK, Canada, the UAE, Malaysia and Thailand.

Officials said the APG team also expressed concerns about implementing recommendations on extradition of criminals involved in money laundering and terrorism financing.

Mandatory for Countries to Deny Safe Havens to Those Charged With Terrorism

The FATF makes it mandatory for member countries to deny safe havens to individuals charged with financing of terrorism, terrorist acts or terrorist organisations.

Various departments gave presentations to the APG on their role in curbing money laundering and terrorism financing.

The visiting experts were largely satisfied with the performance of Anti Narcotics Force, SECP and NAB. But they sought improvements in the skill sets of the Financial Monitoring Unit and National Counter Terrorism Authority (NACTA).

Discussions were also held on effective supervision of financial institutions to ensure that the secrecy laws did not hamper implementation of the FATF recommendations. The visiting experts also stressed that beneficial ownerships should not be used to protect the proceeds of crimes.

They also discussed Pakistan's legal and regulatory regimes on beneficial ownership and trusts, which could be used for laundering money.

Pakistani authorities are learnt to have informed the APG team about measures taken by the country to comply with the United Nations Security Council resolution 1267 and 1373, targeting financial sanctions against terrorists.