— UAE added to global watchdog’s grey list over dirty money
PARIS/ISLAMABAD: A minister heading the implementation of an action plan given to Islamabad by the Financial Action Task Force (FATF) said Pakistan’s fight against dirty money will continue with an “unwavering national resolve”, hours after the global financial crime watchdog announced to keep the country on a list of jurisdictions subject to increased monitoring, known as its “grey list”.
With just two unmet targets out of 34 action points, the Paris-based agency retained on the “grey list” of countries, one of two classifications used by the intergovernmental body for nations determined to have “strategic deficiencies”, asking Islamabad to address the remaining deficiencies in its financial system as soon as possible.
The announcement late Friday means, however, Islamabad avoided being put on the so-called “black list” of countries of the watchdog. Those countries not only do not take adequate measures to halt money laundering and terror financing but also have not committed to working with the FATF.
This decision was made after the conclusion of the four-day plenary meeting from March 1-4.
The watchdog, at the concluding session of its meeting late Friday, also appreciated Pakistan’s “robust progress” on its global commitments to fight financial crimes.
“Since June 2021, Pakistan has taken swift steps towards improving its AML/CFT [anti-money laundering/combating of financing of terrorism] regime and completed 6 of the 7 action items ahead of any relevant deadlines expiring, including by demonstrating 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 agency said in a statement.
“Pakistan should continue to work to address the one remaining item in its 2021 action plan by demonstrating a positive and sustained trend of pursuing complex ML [money laundering] investigations and prosecutions,” it added.
Commenting on the progress of the agenda, Minister for Energy Hammad Azhar Saturday said six out of the seven items on the latest plan were addressed within an “unprecedented timeframe”, while 26 of the 27 items on the original 2018 terror financing action plan were also addressed.
“Our fight against money laundering and terror financing continues with an unwavering national resolve. We wage war on these activities not just for global compliances but first and foremost for our own sake,” he tweeted.
Pakistan is now just 2 items away from completing both its FATF action plans.
ML Action Plan: 6 out of 7 items addressed within an unprecedented timeframe.
TF Action Plan: 26 out of 27 items addressed. A number of countries believe that we have already completed this plan. 1/2
— Hammad Azhar (@Hammad_Azhar) March 4, 2022
“A number of countries believe that we have already completed this [action] plan.”
In 2018, the group returned Pakistan to the grey list of nations with a high risk of money laundering and terrorism financing but which have formally committed to working with the task force to make changes.
In addition to further FATF scrutiny, countries on that list risk reputational damage, ratings adjustments, trouble obtaining global finance and higher transaction costs, experts say.
Currently, only Iran and North Korea are blacklisted, a designation that severely restricts a nation’s international borrowing capabilities. Pakistan is trying to avoid that designation but also get off the grey list.
Independent observers have come to believe Pakistan’s retention in the grey list is a political decision.
According to a Foreign Office spokesperson, who spoke at his weekly media briefing last Friday, Pakistan has “completed all technical requirements of the FATF, and it is only because of certain members of the group that the watchdog has refused to remove it from the grey list”.
In October, an Islamabad-based independent think tank, Tabadlab, estimated it has cost the economy $38 billion since Islamabad was put on the grey list.
The latest meeting took place in a hybrid format with a significant number of participants attending in person due to the gradual easing of Covid-19 restrictions in several countries.
UAE JOINS CLUB
Meanwhile, the anti-money laundering watchdog also placed the United Arab Emirates (UAE) on the grey list.
It said Friday that the UAE has made “significant progress” in enhancing its systems for fighting financial crime, including improvements in its ability to confiscate criminal proceeds and cooperate with investigators from other countries.
But FAFT said it still needed to make improvements in several areas, including a need to strengthen its ability to pursue high-risk money laundering threats and demonstrate a “sustained increase” in effective money laundering investigations and prosecutions.
In response, the UAE said it “takes its role in protecting the integrity of the global financial system extremely seriously and will work closely with the FATF to quickly remedy the areas of improvement identified”.
The UAE, an oil and gas exporter that touts open-for-business credentials and enables glitzy expatriate lifestyles, has in recent years tightened regulations to overcome an image as a hotspot for illicit money.
The designation is a blow for the country as economic competition accelerates with Gulf neighbour Saudi Arabia, the world’s top oil exporter and biggest Arab economy.
“The UAE has inherent vulnerabilities to illicit finance due to its role as a regional commercial and financial hub,” said Katherine Bauer, a senior fellow at The Washington Institute for Near East Policy and a former US Treasury official.
