FATF retains Pak in 'grey list'; asks it to prosecute Azhar, Saeed

The Financial Action Task Force (FATF) on Friday retained Pakistan on its 'grey list' for failing to check money laundering, leading to terror financing, and asked Islamabad to investigate and prosecute senior leaders and commanders of United Nations-designated terror groups, including Hafiz Saeed and Masood Azhar.

The global body against money laundering and terror financing also asked Pakistan to work to address its strategically-important deficiencies.

FATF president Marcus Pleyer said the decision has been taken at the conclusion of the virtual plenary of the Paris-based organisation.

Addressing a virtual press conference, Pleyer said the Pakistan government has failed to check risk of money laundering, leading to corruption and terror financing.

Pakistan will continue to remain on 'increased monitoring list', the FATF president said.

'Increased monitoring list' is also known as the 'grey list'.

Noting that Pakistan has now completed 26 of the 27 action items given to it in 2018, Pleyer said the FATF has asked Pakistan to take action against UN designated terrorists.

'The FATF encourages Pakistan to continue to make progress to address as soon as possible the one remaining Combating the Financing of Terrorism (CFT)-related item by demonstrating that Terror Financing (TF) investigations and prosecutions target senior leaders and commanders of UN designated terrorist groups,' an FATF statement said.

The UN designated terrorists based in Pakistan include Jaish-e-Mohammed (JeM) chief Azhar, Lashker-e-Tayiba (LeT) founder Saeed and its 'operational commander' Zakiur Rehman Lakhvi.

Azhar, Saeed and Lakhvi are most wanted terrorists in India for their involvement in numerous terrorist acts, including 26/11 Mumbai terror attacks and bombing of a CRPF bus in Jammu and Kashmir's Pulwama district in 2019.

The FATF said Pakistan should continue to work to address its strategically-important deficiencies by enhancing international cooperation by amending its anti-money laundering law and demonstrating that assistance is being sought from foreign countries in implementing UNSC Resulution1373 designations.

Pakistan should also be demonstrating that supervisors are conducting both on-site and off-site supervision commensurate with specific risks associated with Designated Non-Financial Businesses and Professions (DNFBPs), including applying appropriate sanctions where necessary.

Pakistan has also been asked to ensure that proportionate and dissuasive sanctions are applied consistently to all legal persons and legal arrangements for non-compliance with beneficial ownership requirements, demonstrating an increase in money laundering investigations and prosecutions and that proceeds of crime continue to be restrained and confiscated in line with Pakistan's risk profile.

This included working with foreign counterparts to trace, freeze, and confiscate assets and demonstrating that DNFBPs are being monitored for compliance with proliferation financing requirements and that sanctions are being imposed for non-compliance, it said.

The FATF also referred to the high level political commitment made by Pakistan in 2018 to work with the FATF and Asia Pacific Group to strengthen its anti money laundering and combating the financing of terrorism.

With Pakistan's continuation in the grey list, it is increasingly becoming difficult for the country to get financial aid from the International Monetary Fund (IMF), World Bank, Asian Development Bank (ADB) and the European Union, thus further enhancing problems for the neighbouring country which is in a precarious financial situation.

Pakistan needed 12 votes out of 39 to exit the grey list and move to white list.

Islamabad has been avoiding black list, for which it needs support of three countries.

China, Turkey and Malaysia are its consistent supporters.

Pakistan was placed on the grey list by the FATF in June, 2018 and was given a plan of action to complete it by October, 2019. Since then the country continues to be in that list due to its failure to comply with the FATF mandates.

The FATF is an inter-governmental body established in 1989 to combat money laundering, terrorist financing and other related threats to the integrity of the international financial system.

The FATF currently has 39 members including two regional organisations -- the European Commission and Gulf Cooperation Council.

India is a member of the FATF consultations and its Asia Pacific Group.