Pakistan’s FATF compliance: Loopholes in small savings accounts left deliberately for terror financing – News Vibe24

    Pakistan's FATF compliance: Loopholes in small savings accounts left deliberately for terror financing - Times of India
    TEL AVIV: Pakistan has deliberately left gaps in small savings accounts to help fund terrorist groups, many of which enjoy state protection to avoid control of the Financial Action Task Force (FATF).
    The FATF urges Pakistan to comply with international standards and regulations and laws and regulations in the fight against money laundering and counter-terrorism.
    Fabien Baussart, writing in a blog post on The Times of Israel, said that although Pakistan had complied with some of the FATF’s conditions with great reluctance, there was one area that had not paid enough attention to link terrorist financing – small savings accounts.
    Small savings in Pakistan generate more than Rs 4 trillion in more than seven million privately held accounts, accounting for 28% of all bank deposits.
    The likelihood of terrorist groups and individuals holding these accounts remains quite high, given the number of terrorist groups and executives in Pakistan. According to Prime Minister Imran Khan, two years ago Pakistan hosted more than 40,000 terrorists, Baussart said.
    These shortcomings were identified by the FATF in its two recent compliance reports – October 2019 and September 2020. The October 2019 report clearly stated that a large part of the banking sector, both formal and informal, was either out of context any law on money laundering or non-compliance with existing regulations for the detection of suspicious accounts and transactions.
    In the September 2020 monitoring report, the FATF referred to the new set of rules issued by Pakistan after the October 2019 report, but provisions for prosecution are still missing from the book of rules, which allowed the banking sector to relax in detecting suspicious accounts and transportation, The Times of Israel reported.
    The problem lies in the new rules – National Savings Rules (AML and CFT), 2019, which require control of all account holders – seven million of them – in six months and the risk of profiled account holders in a similar period, Baussart.
    The All Pakistan National Savings Officer Association (APNSOA) has cited a number of reasons why Pakistan was unlikely to meet the FATF’s small savings obligations.
    The first is that the problems in identifying consumers as a mechanism for this have not been implemented despite such a strict and almost impossible deadline. Indicatively, hard copies of KYC (Meet Your Customer) were not available until April of this year at any of the National Savings Centers.
    The mismatch between intent and action on the ground, according to bank officials, is the result of the supervisory board’s ineffectiveness against money laundering and the fight against terrorism and abuse of power.
    The officials, who were critical, simply failed to design and implement measures to help Pakistan comply with the anti-money laundering and anti-terrorism measures (AML and CFT), officials said. reported The Times of Israel. .
    Authorities have not modified National Savings software application to comply with the new provisions. Banking staff do not yet have adequate equipment and protocols for data verification, KYC document control, and the use of biometric data. Instructions for banking staff and customers are missing as of now, Baussart said.
    With these huge problems in a single segment of the financial sector, Pakistan’s efforts to comply with the FATF are likely to remain unclear when the International Monitoring Committee meets next time.
    The FATF meeting will take place between June 21 and 25 to discuss Pakistan.
    Pakistan has been on the FATF blacklist since June 2018. Earlier in February, the World Terrorist Financing Observer kept Pakistan on its “gray list” until June, after concluding that Islamabad did not shortcomings to fully implement the 27-point Action Plan drawn up by the Guardian for Pakistan.

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