Pakistan brief’s FATF on actions taken against money laundering

ISLAMABAD: The Pakistani authorities on Tuesday briefed the Financial Action Task Force (FATF) assessment team on laws against money laundering and its regulations.

The meetings between Pakistan officials and the FATF’s Asia Pacific Group team have entered the second day. The delegation is currently visiting Pakistan to evaluate the measures taken to curb terror financing and money laundering in the country.

The visiting delegation, in its review meeting, also presented its report on the state of money laundering and terror financing in Pakistan. According to sources in the finance ministry, Pakistan put up a stringent defence on FATF’s Asia Pacific report.

Sources said that Pakistan would soon share the record of transactions of unprofitable entities with the FATF, adding that the visiting team was also informed about loans taken by Pakistan from monetary institutions.

The Pakistani officials briefed the FATF team on actions against fake bank accounts and transactions through illegal channels. Pakistan assured the FATF delegation of halting registration of suspicious firms to curb money laundering practices.

Meanwhile, the Securities Exchange Commission of Pakistan (SECP) has briefed the FATF team on regulatory measures taken to stop money laundering in nonprofit organizations and financial institutions/organizations.

Sources said that two departments, SECP and Financial Monterey Unit (FMU), on Tuesday also briefed the assessment team about suspicious transaction reports and subsequent actions taken by the FMU in this regard.

SECP officials informed the team that there are 450 NPOs registered currently with the commission and that the commission has kept a rigorous check on them. SECP also made an AML/CFT risk rating of financial institutions, according to which eight per cent securities brokers are in high, 18pc brokers are in moderate-high, 55pc brokers are in medium and 19pc are in low category.

Similarly, some 48pc insurance companies are in medium and 52pc are in a low category. In addition, some 50pc NBFCs are in medium and low category respectively.

The SECP also reported 48 suspicious transaction reports to FMU during the July 2018 to December 31, 2018, and it imposed Rs66.7 million penalties on securities brokers, insurance companies during the years 2014 to 2018. Besides this, SECP has also issued 86 warnings to securities brokers, 9 to Insurance companies, 212 NBFCs and Modarabas since January 2014.

SECP officials informed that the department has been developing a risk-based approach for the commission’s supervisory regime to effectively address any potential of money laundering within the SECP’s regulated sectors. Similarly, they are also providing necessary assistance to operational departments in the implementation of AML/CFT supervisory regime.

Besides this, SECP is undertaking an assessment of compliance with the FATF recommendations and the effectiveness of the implemented AML/CFT regime.

Sources said that law enforcement agencies will brief APG mutual evaluation team about the action taken on Wednesday.

The FATF had placed Pakistan on a money laundering “grey list” early in 2018 but given it time to take action against further downgrade.

“Since June 2018, when Pakistan made a high-level political commitment to work with the FATF to strengthen its anti money laundering/combating financing of terrorism regime and to address its strategic counter-terrorist financing-related deficiencies, Pakistan has taken steps towards improving the regime, including by operationalising the integrated database for its currency declaration regime,” the body said in a statement.

In order to qualify for a de-listing, the FATF has urged that, Pakistan should continue to work on implementing its action plan to address its strategic deficiencies.

Pakistan has taken substantial steps to curb money laundering and terrorism financing. The Pakistani agencies traced around 8500 suspicious transactions and imposed ban on the militant groups involved in extremist activities.

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