PAKISTAN: Is it Bound for the Blacklist?

ABDULMOHSAN ALMUTAIRI WRITES—Pakistan is on the verge of being blacklisted. 

This month the Asia Pacific Group (APG) published its report regarding Pakistan’s compliance with parameters set forth by the Financial Action Task Force (FATF). The FATF’s goal is two-fold: to monitor money laundering and the financing of terrorists. It does so, nation by nation. Each nation gets a score. Those that are poorly rated are registered on a grey list; the worst offenders descend onto a blacklist. 

Pakistan is on shaky ground. According to the APG report, Pakistan has complied with just 36 of 40 parameters set forth by FATF. What’s missing:

  • Designated non-financial businesses and Profession (DNFBPs): Customer Due Diligence

 

  • Transparency & BO (beneficial owner/ ownership) of legal arrangements
  • Regulation and supervision of DNFBPs
  • Mutual legal assistance: freezing and confiscation 

 

The FATF report was published after representatives met with a 15-delegate Pakistani team spearheaded by Minister of Economic Affairs, Hammad Azhar. 

Some experts believe that  Pakistan is likely to descend into the blacklist — because  “modest” initiatives haven’t addressed how to deal with anti-terrorist networks or what measures it will use to prevent anti-money laundering measures.  In addition, in June 2018 the UK, the US and India accused Pakistan of supporting terrorism. Few other member nations of FATF stood up for Pakistan. But the Foreign Minister of Pakistan, Shah Mahmood Qureshi, attributes these negative reports to Indian propaganda. In addition, Pakistan has been accused of supporting terrorism in the Indian state of Kashmir. Any future skirmish between the two opposing national forces or a terror attack in Kashmir linked to Pakistan  may further increase its chances of being black-listed.

Pakistan cannot afford to be blacklisted. Consider the possible consequences: International banks and other financial institutions might be asked to restrict their ties and activities with Pakistan. Outside investors might not want to do business with a blacklisted country for fear of risking further financial losses. Relations with the $6 billion-dollar loan program with the International Monetary Fund (IMF) could be hindered. That’s some risk list.

 

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