New Delhi: During a particularly tense period in the subcontinent, Friday was marked by claims and counterclaims over whether Pakistan had been formally ‘blacklisted’ by a regional money-laundering watchdog.
Pakistan on Friday strongly rejected claims that it been “blacklisted” by the Asia Pacific Group, noting instead that it had been placed on an “enhanced” watch-list that would require it to file regular progress reports on a quarterly basis.
Earlier in the day, Indian media reports, quoting anonymous sources, said that APG had put Pakistan in the “enhanced blacklist” for not meeting its standards.
APG’s press release about the conclusion of the annual meeting in Canberra in Australia only mentions that Pakistan’s ‘Mutual Evaluation Report (MER)’ was discussed and analysed over the last two days.
According to the Indian news agency PTI, APG, the regional affiliate of the Financial Action Task Force (FATF), has also found that Pakistan was non-compliant on 32 of the 40 compliance parameters of terror financing and money laundering.
After Indian television channels reported throughout the day that Islamabad has been “blacklisted”, Pakistan’s finance ministry dismissed these reports as “incorrect and baseless”.
In a statement, the finance ministry acknowledged that Pakistan had been put in a lower category of countries, but denied that it was equivalent to a ‘blacklist’.
“It is clariﬁed that APG in its 2nd Annual Meeting held in Canberra, Australia from 18-23 August 2019 has adopted Pakistan’s 3rd Mutual Evaluation Report and has put Pakistan in its enhanced follow-up as per APG’s Third Round Mutual Evaluation Procedures. In line with APG’s Third Round Mutual Evaluation Procedures, Pakistan would be required to submit follow-up progress reports to APG on quarterly basis,” it stated.
As per the APG’s website, the Mutual Evaluation is “complementary” to the FATF’s own review system, but not similar as they serve “different purposes”.
Since June 2018, Pakistan has been on FATF’s grey list of countries whose domestic legislation and implementation is too weak to tackle money laundering and terrorism financing. The FATF had given time till October 2019 to Pakistan to implement its action plan, failing which it will “decide the next step at that time for insufficient progress”.
The APG Mutual Evaluations is a peer-review system to determine whether countries meet the compliance standards for money laundering and terror financing.
After a country submits a Mutual Evaluation report (MER), APG members can decide to place a member either through regular or enhanced follow-up. While a regular follow-up means just biennial reports, a country put under enhanced follow-up has to send four reports of compliance the following year.
As per APG”s handbook of evaluation procedures, ‘Enhanced follow-up’ is an intensive process of correction that “deals with members with significant deficiencies (for technical compliance or effectiveness) in their AML/CFT systems”.
According the Indian newspaper Hindustan Times, APG had found that Pakistan was non-compliant on 32 of the 40 compliance parameters.
The Pakistani newspaper, Dawn, meanwhile contacted the statement of FATF communication management advisor Alexandra Wijmenga-Daniel, who stated that the power of blacklisting lies only with FATF.
“At each plenary meeting, the FATF discusses and updates its two public documents identifying jurisdictions that may pose a risk to the international financial system. The decision to make modifications to these documents (including blacklisting or removal) lies with the FATF Plenary only,” Wijmenga-Daniel stated.
The Indian media has also reported that the chances of Pakistan getting ‘blacklisted’ at the FATF plenary in October has dimmed with China taking over as president of the grouping.