Pakistan moves to address deficiencies in AML, CFT regime

The Nation News
April 03, 2018
Tahir Niaz

Preparing to develop consolidated database of known terrorists, terror organisations I FMU prepares draft ‘action plan’ to prevent illicit cross-border currency transportation.

ISLAMABAD - Pakistan is preparing to develop a consolidated database of known terrorists and terrorist organisations which will be accessible for financial institutions and law enforcement agencies of the country as the country has moved to address deficiencies in the country’s Anti-Money Laundering and Counter Financing Terrorism regime.

The move comes on the heels of the plenary meeting of Financial Action Task Force (FATF) held on February 18-23 in Paris in which the Force approved nomination proposal tabled jointly by the US, UK, France and Germany to place Pakistan in the Grey List of FATF, according to the documents exclusively available with The Nation.

Realising the consequences, Pakistan is fast moving to address the deficiencies in the country’s Anti-Money Laundering and Counter Financing Terrorism regime identified in the nomination proposal approved by the Financial Action Task Force in February and has prepared a draft action plan in this regard. The draft action plan also includes development of a consolidated database of known terrorists and terrorist organisations and access of this database to financial institutions and LEAs and concrete steps to prevent illicit cross-border transportation of currency. Several meetings have so far been held to discuss the draft action plan, according to the officials involved in the process. The action plan would be implemented at a fast pace, according to the officials who spoke to The Nation on condition of anonymity.

The areas on which the action plan would be based include; supervision and enforcement of AML/CFT controls by financial institutions including money service businesses, measures to prevent illicit cross-border transportation of currency, progress on terrorist financing investigations and prosecutions, including the necessary coordination with provincial authorities, and implementation of targeted financial sanctions regarding coordination between provincial and federal law-enforcement authorities to identify and freeze UNSCR 1267 and 1373 property and enforcement of prohibition of funds and financial services.

Under “Supervision and enforcement of AML/CFT controls by financial institutions”, the action plan has proposed the Pakistani institutions to identify and sanction unlicenced money remitters and also identify the sanctions available against exchange companies and demonstrate how they are implemented.

The action plan has also suggested additional measures on exchange companies, provide details of cases (investigation, prosecution and conviction) initiated against Hawala/Hundi operators.

Awareness campaign against Hawala and Hundi would also be launched while the SBP and FIA would be responsible for implementation of this part of the action plan.

The authorities have also suggested progress on terrorist financing investigations and prosecutions, including the necessary coordination with provincial authorities. Under the action plan, details of terrorist financing, prosecution and convictions would be provided to the relevant quarters and it will be ensured that centralised database of all terrorism related cases has been established and available to the LEAs. The Ministry of Interior, NACTA, provincial counter-terrorism departments and FIA would take responsibility for its implementation. 

The action plan also suggests effective implementation of currency declaration system at all entry and exit points in the country. The authorities would demonstrate how in practice, customs effectively detects, interdicts, seizes and sanctions cases of cash couriers. They would also ensure that there is adequate coordination among customs, immigration and other related authorities on issues relating to implementation of cross border transportation of cash. It would be ensured that details regarding declaration of currencies and seizure of currencies are periodically shared with the Financial Monitoring Unit. A separate FMU has been established in the State Bank of Pakistan which would interalia, receive, analyse and disseminate the suspicious transactions reported by banks/DFIs. Developing database of passengers carrying foreign exchange above threshold limit and sharing information with FMU has also been suggested in the action plan.

The action plan has also suggested coordination between provincial and federal law enforcement authorities to identify and freeze UNSCRs 1267 and 1373 property. Details of coordination mechanism that exists between federal/provincial authorities, steps taken by the authorities to identify terrorist assets and economic resources and details of designated/proscribed individuals/entities be available to all federal/provincial authorities to intercept funds or other assets of such individuals/entities. Details of assets frozen by authorities separately under the UNSCRs, details of frozen financial assets, details of other assets frozen and seized (cash donations, moveable/immovable properties-vehicles, businesses etc.) and details of assets taken over by the federal/ provincial governments would also be shared with the federal/ provincial authorities.

For the enforcement of prohibition of funds and financial services, the authorities have recommended to ensure that SROs issued under UNSCRs 1267 and 1373 (issued under ATA) contain the language as required under persons and entities. The authorities would demonstrate that SROs issued under UNSCR-1267 are implemented without delay. The government would also frame ATA freezing and seizure rules under the Anti-Terrorism Act-1997 and ensure that Anti-Terrorism Amendment Ordinance 2018 is enacted through the parliament, according to the draft action plan. Awareness raising campaigns restricting the use of social media for fund raising by designated/proscribed entities would be ensured while the Ministry of Foreign Affairs, MOI, SBP, SECP and NACTA would implement this part of the plan, according to the documents.

The investigation officers would be trained on investigation of financial aspect in terrorism cases and it would be ensured that list of persons on 4th schedule is available to all financial institutions and Designated Non-Finance Businesses. Furthermore, implementation of sanctions prescribed under section 11 (O) (2) of ATA-1997 and supervision and enforcement of AML/CFT controls by financial institutions, including money service business would be ensured. The recommended actions also include steps taken by the authorities to identify terrorist assets and economic resources; details of designated proscribed individuals/ entities would be available to all federal and provincial authorities to intercept funds or other assets of such individuals and entities.

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