Pakistan is not doing enough to counter money laundering (ML) and terror finance (TF) on the country’s soil, said the the Asia Pacific Group (APG) on Money Laundering, which is the regional affiliate of the Financial Action Task Force (FATF).
In a report titled "Anti-money laundering and counter-terrorist financing measures, Pakistan, Mutual Evaluation Report – October, 2019," the group said that in order to avoid black-listing, Islamabad should “adequately identify and assess” ML and TF risks as well as risks associated with the terrorists groups operating on their soil.
"Pakistan should adequately identify, assess and understand its ML/TF risks including transnational risks and risks associated with terrorist groups operating in Pakistan such as Da’esh, AQ, JuD, FiF, LeT, JeM, HQN, and this should be used to implement a comprehensive and coordinated risk-based approach to combating ML and TF," the report stated.
In June 2018, the Financial Action Task Force (FATF) had put Pakistan on its "grey list" for terror financing and gave the country 15-month deadline to implement its recommendations. With the deadline already ended last month, the final review of Pakistan is likely to take place later this month.
The Asia Pacific Group (APG) said that although Pakistan has taken some enforcement actions against Hawala/hundi under the Foreign Exchange Regulation Act 1947, the country needs "major improvements".
"Pakistan has a mixed level of technical compliance with relevant FATF recommendations and major improvements are needed in Pakistan’s international cooperation actions against criminals and their assets,” the report said.
The report also said that there are "major technical shortcomings" in Pakistan's legal framework and called for "fundamental improvements" to diminish the risks of money laundering and terror financing.
"Pakistan’s legal framework on transparency of legal persons and arrangements has moderate and major technical shortcomings (respectively). Moreover, fundamental improvements are required to Pakistan’s ability to effectively mitigate the risk of ML and TF through exploitation of those technical weaknesses," it said.