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January 30, 2019 » Today News

Pakistan gets six months to collect data and track transactions in the fight against money laundering and terror financing

Pakistan gets six months to collect data and track transactions in the fight against money laundering and terror financing

The visiting Asia Pacific Group (APG), a regional body of Financial Action Task Force (FATF), has agreed with the Pakistani authorities to extend the deadline for placing umbrella institution for collection of data, monitoring and tracking down all major transactions into the real estate in the next six months till March 2019 to combat money laundering and terror financing.

Pakistan and the visiting APG team agreed that real estate, trade based transactions, non-profit organisations (NPOs), trusts, banking and non-banking financial institutions are among the major avenues for parking dirty money earned through money laundering and terror financing inside Pakistan. The APG team is currently visiting Pakistan and now they are going to conclude the process of mutual evaluation for this phase on Friday (today). Both sides have agreed that the real estate is the main source of money laundering in Pakistan so placement of regulatory framework with the mandate for collection of data, sharing all kind of details of transactions and then raising Suspicious Transaction Reports (STRs) to curb laundered money, tax evasion and terror financing would be the responsibility of this upcoming institutional framework.

The aim of such coordination will help government put in place coordinated mechanism for conducting monitoring on the basis starting from housing societies, revenue departments, payment of taxes on real estate transactions and others. Now the visiting APG team has agreed to extend the deadline up to March 2019

Pakistani authorities pointed out that trade transactions on account of imports and exports are allegedly used as tool for making payments through Hundi/Hawala for the purpose of under invoicing, tax evasion and in case of a few instances it could be used for the purpose of terror financing as well. Citing examples, Pakistani officials said the import and export proceeds were done on the basis of Letter of Credit (L/C) and importer or exporter from the basis of Letter of Credit (L/C) and importer or exporter from Pakistan asked buyer or seller to open less price L/C and the remaining amount should be transferred through Hundi/Hawala so these kind of trade transactions need to be scrutinised to ascertain facts.

Thirdly, the NPOs are being misused so there must be harmonised monitoring and evaluation institutional mechanism. The APG team also asked Pakistan to comply with UN resolutions against prescribed banned outfits. When the visiting team was told about granting of permission to certain welfare working outfits the visiting APG team said that Pakistan is sovereign state and its courts are independent but Islamabad being signatory of UN resolutions will have to comply for taking actions against prescribed outfits.

A nine-member team of Asia Pacific Group (APG) comprising members from USA, UK, Australia and other countries, is currently visiting Pakistan for reviewing progress on mutual evaluation of 27 actionable plan for preparation of detailed report and its initial findings are expected to be tabled before the FATF session to be held at Paris in January 2019.

Pakistan will have to comply with 27 actionable plans till September 2019 with possibility of three scenarios such as graduating from grey to green list if fully complied with actionable points, one year extension to grey list if they find out requirement of more progress and downgrading from grey to black list if find out no satisfactory progress having far reaching impact for the country’s economy.

However, there was consensus among different departments within the country that some conditions of the FATF were basically in the interest of Pakistan and all-out efforts must be put together to safeguard larger interest of the country.

Source: The News