Here’s Why Pakistan Can Get Exclusion From FATF Grey List

Pakistan is hoping to get an exclusion from the grey list of Financial Action Task Force (FATF) grey list as it has made substantial progress in complying with 25 of 26 parameters of terror financing and money laundering.

The virtual FATF plenary will be held in Paris from February 22 to 25 to consider cases of various countries on the grey list including Pakistan.

However, India being co-chair of FATF Asia Pacific Group (APG) tightened noose against Pakistan and toughened the objectives with a zero-leniency policy in reviewing steps.

But Pakistan has made significant progress as it has completed 25 of 26 tasks set by FATF set for February 2021.

What Pakistan has achieved so far?

The trials of the cases related to money-laundering and terror financing were expedited and the perpetrators were punished.

The action against banned outfits was also expanded and paced. For this purpose, well-trained officials were deployed in the judiciary and different related institutions.

Some 1,267 proscribed outfits banned by United Nations (UN) regime were dismantled while some 1,373 suspects were sentenced for having links with them. Their bank accounts and assets were frozen under UN rules.

Pakistan upgraded the madrassahs (religious seminaries) and streamlined them.

Security Exchange Commission (SECP) and provinces were linked owing to which banned outfits cannot operate across the country if they get banned centrally.

The inflow of foreign remittances was channeled with the elimination of hawala and hundi and the initiative of Roshan Digital Accounts (RDAs) was taken.

Meanwhile, Pakistan is also taking measures to stop currency smuggling through the land, air, and water.

Amendments in Companies Act 2017

Pakistan has made significant changes in the Companies Act 2017 to meet targets of FATF regarding anonymous companies.

Under new amendments, complete details of the real owners and major shareholders of the company must be provided along with the abolishment of barrier shares.

As per new sections, 122 and 123 of the Companies Act 2017, all companies are bound to share complete details of the companies’ owners along with details of major shareholders in it.

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An individual possessing 25% shares of a company will be considered an owner and it would be mandatory for him to reveal sources of income.

A sub-section 60-A has also been made part of the Act under which the sale and purchase of barrier shares have been abolished.

The measure will prevent proscribed outfits from benefitting from the firms through barrier shares while it would also eliminate dubious transactions through it.

Target yet to be achieved

Pakistan has partially completed the last requirement of FATF as it has only banned new financial schemes for Pakistan Post.

FATF wants the State Bank of Pakistan (SBP) to monitor all transactions of Pakistan Post along with their digitalization.

However, the country is facing extreme difficulties to upgrade the existing poor infrastructure of Pakistan Post.