ISLAMABAD: Pakistan, to the dismay of many has been placed on the FATF grey list. However, massive steps were taken by state institutions to put a halt to all economic activity that had any linkages to terror financing and money laundering.
The State Bank of Pakistan (SBP) according to sources, imposed penalties worth $16.91 million on 31 public, private and foreign banks for the Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) violations in the last three years. The penalties cover areas such as CDD including customer documentation requirements and on-going monitoring, reporting of transactions, record keeping and internal controls, policies, and procedures.
In addition to the monetary penalties imposed by the SBP from January 1, 2015 to March 31, 2018, the SBP imposed monetary penalties of Rs28 million on six banks over the same period for procedural weaknesses in their targeted financial sanctions (TFS) implementation under the United Nations Security Council (UNSC) SROs, such as delays and reported linkages of customers with designated/proscribed entities.
Pakistan has also frozen 177 additional accounts in the amount of Rs48.222 million (approximately $0.438 million at the rate of 110 PKR/USD) due to indirect linkages/association of customers with UNSC listed persons/entities after the Financial Action Task Force (FATF) October 2017 plenary, sources added.
SBP actions have resulted in the following steps such as the banks have dedicated compliance and AML/CFT functions for monitoring of ML/FT risk, furthermore, banks have globally renowned screening systems/software where customers are screened against the UNSC designated list, internally listed persons/entities and OFAC listings.
Sources informed that the banks have placed an AML officer and AML analysts to review alerts generated through the systems and to take appropriate actions and it is worth mentioning here that these AML officers are also experts on CFT analysis.
The important thing that the SBP has advised banks is not to maintain any “good guy list’. This came as a consequence after Habib Bank created a list of individuals, which included known terrorists and criminals, whose transactions went unscreened by the bank, and the New York Department of Financial Services (NYDFS) had to take action against the bank.
Moreover, Pakistan’s delegation informed the FATF authorities that the SBP has referred 190 cases since 2015 to law enforcement for legal action against the unlicensed MVTS continuing to operate illegally throughout Pakistan, particularly in Peshawar and Karachi, in addition, Since 1 January 2015 to present, the FIA registered 1038 cases of illegal MVTS operators, of which convictions have been secured in 144 cases while 440 cases are under investigation and 394 cases are at trial stage In the 144 conviction cases Rs8,032,000 (Equivalent to USD 69,355) in monetary penalties were imposed by the courts. In relation to the 1038 cases, 138 financial intelligence reports relating to Hawala/Hundi were disseminated to FIA by FMU during the period January 2015 to March 2018; 190 complaints of illegal MVTS operators were forwarded by SBP, and around 100 reports were forwarded by intelligence agencies to FIA in the same period.
Sources told that Customs authorities seized a total of Rs861,405,000 ($7.5 million) at various borders in Pakistan from 2012 to 2018, Pakistan reported that ML and TF investigations stemming from these seizures resulted in no TF cases and a few ML cases.
There were 88 first incidence reports (FIRs), 62 convictions representing a 70 per cent conviction rate over the period and seizures of around $7 million. In these cases, none of the convicted persons was UNSC designated or belonged to the UNSC-designated terrorist groups.
During the last three years, LEAs have registered 150 cases relating to terror-financing (TF) offences, abetment and facilitation. Of these cases, there have been 30 TF cases resulting in 41 convicted persons, sources further told that
Out of over 740 terrorism cases in the Sindh province, there were nine TF cases. In KPK, out of over 1400 terrorism cases, 37 were TF cases.
Pakistan reported that since 2015, CTD Punjab has registered 540 cases against organizations proscribed under ATA, 1997; arrested 765 accused; and prosecuted and procured convictions of 227 accused from Anti-terrorism Courts under ATA, 1997 in 165 cases. A trial is underway in an additional 50 cases under the ATA, 1997 for acts of terrorism, acts intended or likely to stir up sectarian hatred, section 8 and sections 11H to 11K against individuals belonging to different proscribed entities, including 35 TF cases and 13 cases related to AQ. An investigation is also underway in 12 cases under the ATA, 1997.
Sources told that the Pakistani delegation has shared the 27 point action plan with FATF authorize which will be implemented till September 2019.
For instance, sources told that Pakistan will submit its report to FATF authorities till September 2019 regarding the LEAs’ identification and investigation on TF activities with particular focus on TF risk profile including cash smuggling, illegal MVTS, narcotics trafficking, misuse of NPOs, proceeds of smuggling including natural resources, as well as funding the terrorist groups including Da’esh, AQ, JuD, FiF, LeT, JeM, HQN, and persons affiliated with the Taliban.
Sources told those American and Indian lobbies vigorously pursuing to put Pakistan’s name on a blacklist of TF countries, however with the submission of these action plans, Pakistan will remain in the grey list, which is considered a relative success by many.
It is pertinent to mention here that China, Turkey and Saudi Arabia opposed the United States-led move to place Pakistan on the watch list in FATF plenary meeting held in February on Pakistan but then, Washington had convinced Riyadh to give up its support to Pakistan in return for a full FATF membership.