Pakistan’s FATF Status: APG Report Highlights Major Shortcomings in 2019

In August 2019, Pakistan came under increased scrutiny after the Asia/Pacific Group on Money Laundering (APG), a regional body affiliated with the Financial Action Task Force (FATF), adopted its third Mutual Evaluation Report on the country.

The report identified significant shortcomings in Pakistan’s legal and financial systems in tackling money laundering and the financing of terrorism. However, reports claiming that Pakistan had been blacklisted by the APG were inaccurate. Instead, Pakistan was placed in the Enhanced Follow-up category, which required it to submit progress reports to the organisation every quarter.

According to the assessment, Pakistan was fully compliant with only one of the 40 FATF recommendations. It was rated largely compliant with nine recommendations, partially compliant with 26 and non-compliant with four. These findings highlighted the need for substantial improvements in the country’s anti-money-laundering and counter-terrorist-financing framework.

The APG adopted the report during its 22nd Annual Meeting, held in Canberra, Australia, from August 18 to 23, 2019. The assessment covered Pakistan’s anti-money-laundering and counter-terrorist-financing measures during the period from February to October 2018.

Following the news, the issue attracted considerable attention on Twitter, with users sharing their reactions.

Mayank Chandel tweeted:

“Well done! Now Pakistan has been internationalized. #FATF #BlackListPakistan”

Another Twitter user, Bittu, wrote:

“Modi magic effect now accelerating internationally very fast. Asia Pacific Group blacklisted Pakistan. #ModiHaiToMumkinHai #FATF”

Earlier, Pakistan had already been placed on the FATF Grey List in June 2018 because of strategic deficiencies in its efforts to combat money laundering and terrorist financing. The country was required to implement an action plan to address these concerns.

Pakistan’s then Foreign Minister, Shah Mahmood Qureshi, had also expressed concern about the possible economic consequences of being blacklisted by the FATF. He warned that such a decision could cause a major economic setback for the country, with estimates suggesting losses of around $10 billion.

The APG’s August 2019 assessment did not itself place Pakistan on the FATF Black List. Instead, it increased the country’s reporting obligations and highlighted areas requiring urgent improvement.