A regional arm of the Financial Action Task Force has found that Pakistan failed to fully implement its obligations under a United Nations Security Council resolution against designated terrorists such as Hafiz Saeed and terror organisations such as the Lashkar-e-Taiba and Jamaat-ud-Dawa.

The Asia Pacific Group on Money Laundering adopted the “mutual evaluation report” on Pakistan at an annual meeting in Canberra in August. The report was released on its website on October 2.

In the 228-page report, the agency said Pakistan had not complied with four of the 40 recommendations given by the FATF, had “partially complied” with 26 recommendations, “largely complied” with nine, and complied with only one.

The Asia Pacific Group said that Pakistan should “adequately identify, assess and understand” its money laundering or terror funding risks associated with outfits operating in its territory such as the Islamic State group, Al Qaeda, Lashkar-e-Taiba and Jaish-e-Mohammad.

In August, Pakistan had rejected Indian reports that the Financial Action Task Force’s Asia Pacific Group had placed Islamabad on an “enhanced blacklist” for non-compliance and non-enforcement of safeguards against terror financing and money laundering. A statement issued by the APG after its Canberra meeting did not mention Pakistan being put on an “enhanced blacklist”. The APG blacklisting status would impair Pakistan’s chances at extricating itself from the FATF greylist.

In June, the global watchdog had warned Pakistan to complete an action plan on terror financing and urged Islamabad to meet the October 2019 deadline. In June 2018, Pakistan was put on its “grey list” and given a 27-point action plan to implement in order to be taken off the list.

India, which is member of both the Financial Action Task Force and Asia Pacific Group consultations, has repeatedly asked Pakistan to take necessary steps to meet international standards in stopping financial crimes.

High risk of money laundering, says report

The Asia Pacific Group report said Pakistan faced high risk of money laundering and terror financing. “A number of terrorists groups, including UN-listed groups, operate in Pakistan all of which raise funds through a variety of means including direct support, public fundraising, abuse of NPOs, and through criminal activities,” the report said. “Funds are moved through formal and informal channels. Pakistan’s geographical landscape and porous borders increase its vulnerability to TF [terror financing] and heightens Pakistan’s TF risks associated with cash smuggling.”

The report also said that Pakistan’s regulators, the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan, either do not have a clear understanding or have very limited knowledge of money laundering and terror funding risks.

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