Crime & Justice

International pressure mounts on Pakistan to tackle illicit financing

By Javed Mahmood

A Pakistani customer arrives at a currency exchange shop in Islamabad October 9. [Aamir Qureshi/AFP]

A Pakistani customer arrives at a currency exchange shop in Islamabad October 9. [Aamir Qureshi/AFP]

ISLAMABAD -- International organisations and watchdogs are continuing to urge Pakistan to strengthen its efforts against money laundering and terror financing as Pakistani authorities continue to crack down on new cases.

Earlier this month, a delegation from the Asia/Pacific Group on Money Laundering (APG) visited the capital Islamabad to assess the effectiveness of the nation's anti-money laundering and counter financing of terrorism (AML/CFT) regime.

Pakistan is working to comply with the requirements of the Financial Action Task Force (FATF), a global terrorism financing watchdog that placed Pakistan on its grey list in June. The APG is a member of the FATF.

The APG delegation said it was unimpressed by Pakistan's progress, adding that the country has weak institutional arrangements and an insufficient legal framework to combat terror financing.

Money laundering cases emerge

The visit by the APG delegation came amid new reports of money laundering cases in Pakistan, involving large sums of money.

Over the past few weeks, local authorities have discovered several bank accounts that were used for the fraudulent transfer of huge amounts of illegal cash in Karachi and Hyderabad, said Dr. Ashfaque Hasan Khan, a dean at the National University of Sciences and Technology in Islamabad.

The cases indicate weaknesses in the banks' "Know Your Customer" policies, which were introduced many years ago to curb the misuse of the financial system and improve the monitoring of customers and their sources of income, Khan told Pakistan Forward.

In other recent cases, people laundered money using abandoned accounts of mostly poor citizens, said Dr. Shujaat Mubarak, a TV analyst and dean of the business studies department at Mohammad Ali Jinnah University in Karachi.

The State Bank of Pakistan (SBP) and commercial banks must launch a nationwide campaign to identify dormant accounts and close them unless the account-holders are interested in maintaining and using them on regular basis, Mubarak told Pakistan Forward.

More work needed

"The government must revamp the teams engaged in the monitoring and tracking of money laundering and threat financing in Pakistan," Mubarak said.

The challenge is that officials at the SBP, the Securities and Exchange Commission of Pakistan as well as local banks lack the technical expertise or training to effectively track suspicious transactions, including money laundering and terror financing, he added.

"The topmost priority of the new government is to curb money laundering, terrorist financing and corruption," Abdullah Khan, the managing director of the Pakistan Institute for Conflict and Security Studies in Islamabad, told Pakistan Forward.

Although the Anti-Money Laundering Act 2010, amended in 2016, deals with all aspects of money laundering and terror financing, its implementation is the real issue, he continued.

Pakistan had already adopted a number of measures to curb money laundering and to eliminate financial access to militants. It's time now to overcome weaknesses in the system, Khan argued.

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I think government of Pakistan is equivalint