Financial Crime World

Pakistan’s Financial Action Task Force (FATF) Compliance Under Scrutiny: A Detailed Analysis

The Financial Action Task Force (FATF), an intergovernmental organization responsible for setting standards to combat money laundering, terrorist financing, and other related threats, has released its Pakistan Follow-Up Report 2022. The report assesses the country’s compliance with the technical requirements of the FATF Recommendations, a set of guidelines aimed at preventing financial crimes.

Strengths

  • Pakistan scored high on several fronts, including:
    • National cooperation and coordination (R.2)
    • Money laundering offence (R.3)
    • Confiscation and provisional measures (R.4)
    • Targeted financial sanctions related to terrorism and terrorist financing (R.6)
  • The country also showed significant progress in implementing measures to prevent cash couriers (R.32) and reporting of suspicious transactions (R.20)

Weaknesses

  • Pakistan fell short on several other fronts, including:
    • Failure to fully implement requirements related to customer due diligence (R.10)
    • Record keeping (R.11)
    • Internal controls and foreign branches and subsidiaries (R.18)
  • The country struggled with transparency and beneficial ownership of legal persons and arrangements (R.24 and R.25)

Progress

  • Pakistan has made progress in implementing measures to prevent the misuse of new technologies (R.15)
  • Strengthened its financial intelligence units (R.29)
  • Improved cooperation with international organizations and other countries on issues related to:
    • Mutual legal assistance (R.37)
    • Extradition (R.39)
    • Other forms of international cooperation (R.40)

Areas for Improvement

  • Pakistan still faces challenges in fully implementing all FATF Recommendations, including:
    • Financial institution secrecy laws (R.9)
    • Correspondent banking (R.13)
  • The report highlighted areas where the country needs to improve.

In conclusion, while Pakistan has made progress in implementing measures to combat money laundering and terrorist financing, it still faces challenges in fully implementing all FATF Recommendations. The country must continue to work on improving its financial institution secrecy laws and correspondent banking practices to strengthen its overall compliance with the FATF standards.