An extraordinary sameness is surfacing through meetings of the Financial Action Task Force in Paris – and not just by way of a continuing grey for Pakistan. The FATF has begun to acknowledge continually now that little more than this could be expected of it.
That acknowledgement is coming in its own words, officially. In keeping Pakistan on the grey list in February of this year, FATF warned that “all deadlines in the action plan have expired.” That is to say, it must reform now, or else, Black. The deadline for showing compliance was the next meeting due in June, that was disrupted by the pandemic. And so it fell to the virtual meeting in Paris October 21-23 this year. If deadlines were stated to have expired in February, surely they had by October.
In its official statement on October 23 keeping Pakistan on the grey list, the FATF declared that “all action plan deadlines have expired”. That is not a copy and paste statement only to the extent that in February of this year tparishe FATF said that “all deadlines in the action plan have expired.” A phraseological and not a physical shift. And one that indicates that the FATF seems publicly unembarrassed about issuing a last warning after another it well knows is unlikely to be the last.
On February 21 of this year, the FATF said it strongly urging Pakistan to swiftly complete its full action plan by June 2020. “Otherwise, should significant and sustainable progress especially in prosecuting and penalising TF (terrorism financing) not be made by the next Plenary, the FATF will take action, which could include the FATF calling on its members and urging all jurisdiction to advise their FIs (financial institutions) to give special attention to business relations and transactions with Pakistan.” Blacklisting, that is.
On October 23, the FATF said it “strongly urges Pakistan to swiftly complete its full action plan by February 2021.” In no more than strongly urging, the FATF really acknowledges the limits of how far it could go. The FATF process with Pakistan began in June 2018.
Between February and October the FATF reports what does appear on the face of it some progress made by Pakistan. In February Pakistan was reported to have met 14 of the 27 requirements given to it. By October it was declared to have met 21 of the 27 requirements. A numerical graphic projection may point to full compliance by February next year. Except that such a projection is most likely to be seriously misleading.
Serious Deficiencies
The FATF is no headmaster awarding marks out of a given maximum of 27. All of these 27 are not equal marks. The six on which Pakistan has not moved are the six that really matter, the 21 supposedly done is some tinkering on the periphery of practices adopted formally by Pakistan’s financial institutions. FATF president Marcus Pleyer pointed out at the end of the plenary that what remains to be done amounts to “serious deficiencies”.
The FATF has spelt out four of these specifically:
(1) “Demonstrating that law enforcement agencies are identifying and investigating the widest range of TF activity and that TF investigations and prosecutions target designated persons and entities, and those acting on behalf or at the direction of the designated persons or entities.” That is to say, the FATF says that Pakistan has not been investigating terrorist financing fully. Nor aiming these actions where they need to be aimed.
(2) “Demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions.” The FATF does not therefore consider that actions claimed to have been taken are effective enough or strong enough to stop those engaged in terror financing.
(3) “Demonstrating effective implementation of targeted financial sanctions against all 1267 and 1373 designated terrorists and those acting for or on their behalf, preventing the raising and moving of funds including in relation to NPOs (non-profit organisations) identifying and freezing assets, and prohibiting access to funds and financial services.” Most significantly the FATF here says that Pakistan is not doing enough against designated terrorists, and their emerging proxies.
(4) “Demonstrating enforcement against TFS violations, including in relation to NPOs, of administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases.” That means quite simply that Pakistan is not moving with demonstrable firmness against groups such as Jaish-e-Mohammed and Lashkar-e-Toiba, because it’s groups like these that are categorised, politely, as Non-Profit Organisations (NPOs).
Pakistan gets 21 out of 27 theoretically as of now, but the real requirements of it lie ahead still. Not everyone is optimistic that Pakistan will do all this by February 2021. If it doesn’t, the FATF will no doubt remind it yet again that all deadlines have expired.
