GLOBAL REGULATION: FATF begins review of terrorist financing, money laundering.

As published on dawn.com, Friday 22 April, 2022.

Ministers and officials from the Financial Action Task Force’s (FATF) 37-member countries and affiliates met in Washington on Thursday to discuss actions to tackle money laundering and terrorist financing.

The meeting will decide FATF’s strategic direction for the next performance assessment of the countries on its watch list. Pakistan is also on this so-called grey list of countries that are still monitored for terrorist financing and money laundering activities within their jurisdictions.

The discussions are part of the spring meetings of the International Monetary Fund and the Board of Governors of World Bank Group that are held annually in Washington.

US Treasury Secretary Janet Yellen is also attending the meeting, which marks the first time FATF ministers meet in-person in three years.

Before the meeting, the FATF issued a report pointing out that “most countries have passed laws and regulations to tackle money laundering and terrorist financing but face major challenges to use them effectively”.

The report also highlights that “many countries still face substantial challenges in taking effective action in line with the risks they face”. This includes difficulties in investigating and prosecuting high-profile cross-border cases and preventing anonymous shell companies and trusts being used for illicit purposes.

The FATF said this strategic review would make the next cycle of its assessments more timely, risk-based and effective.

Earlier this month, a court in Pakistan sentenced Hafiz Saeed, founder of Lashkar-e-Taiba, a group blamed by the United States and India for the deadly 2008 Mumbai siege, to 31 years in prison in two cases of terrorism financing.

Commenting on the conviction, a US scholar of South Asian affairs, Michael Kugelman, said the sentencing “could help Pakistan escape the FATF grey list as its last action item to be completed involves convictions”.

An FATF report issued last month noted that since June 2018, when Pakistan made a high-level political commitment to work with the FATF to address its deficiencies, the country’s “continued political commitment has led to significant progress across a comprehensive counter-terrorist financing action plan”.

Pakistan has completed 26 of the 27 action items in its 2018 action plan. The FATF encourages Pakistan to continue to make progress to address, as soon as possible, the one remaining item — prosecutions and convictions — to demonstrate that its investigations and prosecutions target senior leaders and commanders of UN-designated terrorist groups.

In response to additional deficiencies later identified in FATF’s 2019 report, in June 2021, Pakistan provided further high-level commitment to address these strategic deficiencies pursuant to a new action plan that primarily focuses on combating money laundering.

The FATF noted that “since June 2021, Pakistan has taken swift steps towards improving its deficiencies and completed 6 of the 7 action items ahead of any relevant deadlines expiring”.

Pakistan also demonstrated that “it is enhancing the impact of sanctions by nominating individuals and entities for UN designation and restraining and confiscating proceeds of crime in line with Pakistan’s risk profile”, the FATF added.

The FATF urged Pakistan to “continue to work to address the one remaining item in its 2021 action plan by demonstrating a positive and sustained trend of pursuing complex money laundering investigations and prosecutions”.