Pakistan violates FATF conditions, liable to be sanctioned

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Pakistan has failed to stop terrorist organisations from using their Non-Profit Organisations (NPOs) to raise and transfer funds for keeping them operational despite promises to the global anti-terrorist financing watchdog, FATF, last year. The FATF had removed Pakistan from its greylist on the basis of several promises made by the state in checking the financial
network of various militant groups.

The most glaring instance is that of global terrorist group, Lashkar-e-Tayyiba (LeT), its parent body, Jamaat-ud Dawa and various outfits allied to the group. For instance, the political front of the group, Pakistan Markazi Muslim League (PMML), is active with rallies and events in different parts of Pakistan despite the ban on its parent organisation. On May 28, the group
held a massive rally at Nishan-e-Pakistan monument to observe Youm-eTakbir, celebrated as a national day in Pakistan in commemoration of Chagai-I and Chagai-II series of nuclear tests.

In August, various units of the party held public demonstrations in Karachi and Lahore against rise in petrol prices. These events show how the affiliated groups of the proscribed terrorist organisation, JuD, continues to operate quite freely in Pakistan.

A gaping hole in the new federal budget provisions has also raised serious concerns about Pakistan’s actions to contain terrorist financing. The budget contains a new tax amnesty scheme allowing foreign currency up to US$ 100,000/- to be brought back into Pakistan without any source or proof of income to be presented.

This provision was introduced to shore up the declining forex reserves of the country. But it also offers unscrupulous elements, terror organisations and financiers an easy route to bring in funds for terror purposes and launder them into white money.

This is a clear and fundamental violation of the Immediate Outcome-10 of the FATF. Some of these findings form part of National Residual Risk Assessment (NRRA) 2022 completed by the Financial Monitoring Unit (FMU) of Pakistan.

The investigation identified deficiencies in the implementation of UNSCR 1267 sanctions regime in Pakistan. A key finding of the report is the absence of adequate federal oversight on
the implementation of Targeted Financial Sanctions (TFS) against domestically proscribed entities or individuals and legal gaps related to duallisted persons/entities, who are listed under both UNSCR 1267 and UNSCR 1373 regimes.

The investigation found that there was no inspection or verification mechanism regime at the provincial level with respect to seizure of assets.

There are legislative gaps regarding transfer of legal titles of seized assets from proscribed entities and as a result original owners can legally claim the seized assets on the basis of their legal ownership of these assets once they are delisted.

There were serious lacunae in implementing travel bans on designated persons with dual-residence status. These are persons on the UN Designated Persons (UNDP) on the Taliban (UNSC 1988) Sanctions List.

The Ministry of Interior, a key agency of the federal government to list or delist entities on the First Schedule of the Anti-Terror Act, 1997, lacks any oversight mechanism on the listed entities. The Ministry has rarely investigated any systematic or regular review of the oversight regime except some piecemeal actions.

The report also highlights questions raised by the higher judiciary on the integrity and transparency of domestic proscription criteria by the District Level Committees and Home Departments.

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