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Tag: FATF

  • FATF retains Pakistan in grey list

    FATF retains Pakistan in grey list

    ISLAMABAD: The Finance Action Task Force (FATF) on Friday kept Pakistan in ‘grey list’ despite the country has made significant progress of addressing 26 action plan out of 27.

    FATF President Dr Marcus Pleyer in a press conference announced that Pakistan will continue to remain on the increased monitoring list, also known as the grey list.

    Admitting the performance of the country FATF President Dr Marcus Pleyer said: “Pakistan has made significant progress and it has largely addressed 26 out of 27 measures.”

    Pleyer, however, added that the action plan on financial terrorism still needed to be addressed.

    “In 2019, the regional partner of FATF identified problems in Pakistan’s anti-money laundering measures. But since then it has improved. There remains risk of money laundering and subsequently FATF had discussions with Pakistan.

    “I want to thank the Pakistan government for their continued commitment to address the concerns and make the necessary changes they were asked to effect,” Pleyer said.

    The FATF president said all action plan items needed to be addressed and goals fulfilled for countries to exit the grey list.

    “All countries are equal. This is also our expectation from the Pakistan government.”

    In its last presser following a plenary, on Feb 25, FATF President Dr Marcus Pleyer had said Pakistan remained under increased monitoring, adding, “while Islamabad has made significant progress, there remained some serious deficiencies in mechanisms to plug terrorism financing”.

    Pakistan has been on the FATF’s grey list for deficiencies in its counter-terror financing and anti-money laundering regimes since June 2018.

    Until the last assessment, Pakistan was found deficient in acting against organisations allegedly linked to the terror groups listed by the UN Security Council, prosecuting and convicting banned individuals and tackling smuggling of narcotics and precious stones.

  • Pakistan likely to exit from FATF’s grey list

    Pakistan likely to exit from FATF’s grey list

    KARACHI: The plenary meeting of Financial Action Task Force (FATF) is scheduled to start from June 21, 2021. The meeting may decide to give green signal to Pakistan for white list or maintain its status in the grey list.

    The virtual plenary meeting of the FATF will continue till June 25, 2021. It is hoped the watchdog would give clear Pakistan from its strict monitoring list as the country had done immense progress in meeting the required actions.

    The Asia Pacific Group on Money Laundering (APG) – an arm of FATF- in its mutual evaluation of Pakistan released in May 2021 welcomed the efforts of the country in meeting most of the actions set by the FATF.

    “Overall, Pakistan has made notable progress in addressing the technical compliance deficiencies identified in its MER and has been re-rated on 22 Recommendations.

    “Recommendations 14, 19, 20, 21 and 27 have been re-rated to compliant, and recommendations R.1, 6, 7, 8, 12, 17, 22, 23, 24, 25, 30, 31, 32, 35 and 40 to largely compliant.

    “Recommendation 28 has been re-rated to partially compliant. Insufficient progress has been made to re-rate Recommendation 38. Compliance with Recommendation 37 has been downgraded to non-compliant,” the report said.

    Pakistan government is hopeful that the FATF would delist the country from grey list.

    “Pakistan has achieved compliant rating in 31 out of 40 FATF recommendations (MER technical compliance). This is the parallel scrutiny being undertaken at FATF besides our current action plan. Upgrade of 20 criteria in less than 2 years is unprecedented in FATF history for any country,” Hammad Azhar, a federal minister, said in his tweet on June 04, 2021.

    The FATF put Pakistan in grey list in the year 2018.

  • Pakistan complies with 31 requirement of FATF

    Pakistan complies with 31 requirement of FATF

    KARACHI: Asia Pacific Group (APG) on Money Laundering has published results of Pakistan’s second Mutual Evaluation follow-up Report on 2 June 2021.

    As per the report, Pakistan has achieved compliant/largely compliant rating in 31 out of 40 Recommendations of Financial Action Task Force (FATF) in Technical Compliance.

    These results prove the sincerity along with resolve of the Government in complying with FATF requirements.

    These results are also a manifestation of the irreversibility and sustainability of the complete process in bringing Pakistan at par with Global AML/CFT standards.

    These results are manifestation of a whole of government approach adopted to achieve the same.

    An upgrade of 21 Recommendations within this short period of time remains unprecedented in FATF history.

  • FATF keeps ‘grey’ status for Pakistan despite significant progress

    FATF keeps ‘grey’ status for Pakistan despite significant progress

    ISLAMABAD: Financial Action Task Force (FATF) on Thursday kept Pakistan in its grey list despite acknowledging significant progress made by the country.

    “As all action plan deadlines have expired, the FATF strongly urges Pakistan to swiftly complete its full action plan before June 2021,” a statement of the FATF said. 

    The FATF takes note of the significant progress made on the entire action plan. “To date, Pakistan has made progress across all action plan items and has now largely addressed 24 of the 27 action items,” according to the note.

    Since June 2018, when Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies, Pakistan’s continued political commitment has led to significant progress across a comprehensive CFT action plan, including by: demonstrating that law enforcement agencies are identifying and investigating the widest range of TF activity, demonstrating enforcement against TFS violations, and working to prevent the raising and moving of funds including by controlling facilities and services owned or controlled by designated persons and entities.

    Pakistan should continue to work on implementing the three remaining items in its action plan to address its strategically important deficiencies, namely by:

    (1) demonstrating that TF investigations and prosecutions target persons and entities acting on behalf or at the direction of the designated persons or entities;

    (2) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions; and

    (3) demonstrating effective implementation of targeted financial sanctions against all 1267 and 1373 designated terrorists,  specifically those acting for or on their behalf.

  • Jewelers making cash transactions above Rs2 million liable to comply with FATF conditions: FBR

    Jewelers making cash transactions above Rs2 million liable to comply with FATF conditions: FBR

    ISLAMABAD: The Federal Board of Revenue (FBR) has said that jewelers making cash transactions with their buyers and sellers above Rs2 million are liable to monitoring under Anti-Money Laundering (AML)/Countering Financing of Terrorism (CFT), sources said on Thursday.

    In this regard the FBR issued guidelines for persons dealing in precious stones and metals.

    The procedures have been issued under anti money laundering (AML) and combating financing of terrorism (CFT) and to meet conditionalities of Financial Action Task Force (FATF).

    A jeweler is required to retain record of such transactions for at least five years following the completion of a transaction.

    Bringing Designated Non-Financing Business and Professions (DNFBP) into AML/CFT laws is one of the major requirements of the FATF. The FBR on September 29, 2020 issued SRO 924(I)/2020 to notify regulations namely Anti-Money Laundering and Countering Financing of Terrorism Regulations for DNFBPs, 2020.

    The DNFBPs have been defined as real estate agents, jewelers and accountants.

    The latest procedure for compliance by jewelers has also been issued to make this segment into money laundering free business.

    The sources said a person engaged in the business of precious stones is not subject to AML/CFT if he is selling or buying jewellery below Rs2 million in cash.

    According to the procedures issued by the FBR, if a person is a retail merchant and selling or buying jewellery e.g. rings, bracelets, necklaces and other bodily ornaments may not be a Dealers in Precious Metals and Stones (DPMS) in one year or one month, but the person starts selling or buying such items over Rs2 million threshold, in subsequent years or months, the person would be subject to AML/CFT.

    The FBR interprets the Rs2 million threshold as a cash transaction below threshold amount, if the cash transaction is below Rs2 million but is part of a series of transactions related to the purchase of the same item or items totaling Rs2 million or above.

    The revenue body said that the business of precious stones and metals may be abused by criminals and terrorists because of a number of factors.

    “They can be of very high value, but still very small and therefore very easy to carry, transport and conceal. Transferring ownership does not require any formal registration process unlike for real estate, motor vehicles or share ownership,” the FBR said, adding that the holder of the precious stone and metal is the owner and can be held anonymously without a need for records to be kept.

    “In terms of gold, it can be considered as a universally accepted currency and therefore, investing in gold to launder illegal earnings would be easy as well as profitable,” the FBR added.

    The FBR also issued similar procedures for real estate agents and accountants.

  • Financial institutions to ensure complete identity verification of customers for FATF compliance

    Financial institutions to ensure complete identity verification of customers for FATF compliance

    KARACHI: Financial institution are required to ensure complete identity verification of customers for compliance with Financial Action Task Force (FATF).

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  • FBR issues AML/CFT guidelines for accountants to comply with FATF conditions

    FBR issues AML/CFT guidelines for accountants to comply with FATF conditions

    KARACHI: Federal Board of Revenue (FBR) has issued guidelines for accountants related to Anti-Money Laundering (AML)/Counter Financing of Terrorism (CFT) laws to comply with conditions of Financial Action Task Force (FATF).

    The guidelines have been prepared jointly by Pakistan’s three designated AML/CFT supervisors of accountants in Pakistan, namely The Institute of Chartered Accountants of Pakistan (ICAP), the Institute of Cost and Management Accountant of Pakistan (ICMAP) and the FBR.

    Accountants are only subject to AML / CFT measures if they provide the specified activities or services as defined in the Anti Money Laundering Act (AMLA) Sections 2 (xii) (c) (d).

    All accountants, therefore, should review Section 4 in the Guidelines to determine whether they provide the specified services, and if so, what are the AML / CFT requirements, and how to implement the requirements.

    These are further explained in Sections 5 to 12 of the Guidelines.

    The Guidelines are focused on AML / CFT measures such as risk assessment, AML / CFT programme, CDD, beneficial ownership, politically exposed persons, targeted financial sanctions, Suspicious Transaction Report (STR), Currency Transaction Report (CTR) and record keeping. Those measures are further explained in the Guidelines.

    The guidelines do not add new regulatory requirements upon accountants.

    The guidelines do not address the broader criminal conduct associated with those who engaged in, or aid or abet those engaged in money laundering (ML) or terrorism financing (TF). Those criminal offences under the AMLA and other laws apply to all persons’ subject to Pakistan’s laws.

    In addition to the AMLA, the three main regulations referred to in the Guidelines are:

    The Anti-Money Laundering and Combating Financing of Terrorism Regulations for Cost and Management Accountants Reporting Firms (SRB AML / CFT Regulations for Reporting Firms)

    The Anti-Money Laundering and Combating Financing of Terrorism Regulations for Chartered Accountants Reporting Firms (SRB AML / CFT Regulations for Reporting Firms)

    The Federal Board of Revenue Anti-Money Laundering and Combating Financing of Terrorism Regulations for Designated Non-Financial Businesses and Professions (FBR AML / CFT Regulations for DNFBPs)

    AML / CFT Sanction Rules 2020 SRO NO 950(I)/2020 (AML / CFT Sanction Rules)

    Both the ICAP and ICMAP, as Self-Regulatory Bodies (SRBs), have been designated by Federal Government pursuant to AMLA (Section 6A) as AML / CFT regulatory authorities.

    To avoid repetition and any perceived favouritism, and purely for the purposes of the Guidelines, the two professional bodies will be referred to as “SRBs” and their AML / CFT regulations collectively referred to as the “SRB AML / CFT Regulations for Reporting Firms”. Except for the name of the SRB, the two regulations are identical.

    The FBR AML / CFT Regulations for DNFBPs are very similar to the SRB AML / CFT Regulations for Reporting Firms. However, they are not identical in terms of numbering and there are sector specific requirements covering other DNFBPs that are not applicable to accountants (accountants licensed by ICAP and ICMAP). For these reasons, they are referred separately in the Guidelines.

    The FATF Recommendations of specific concerns to accountants are those covering DNFBPs. DNFBPs include the following:

     Casinos

     Real estate agents

     Dealers in precious metals and stones

     Trust and company service providers

     Lawyers, notaries, other independent legal professionals and accountants – when they prepare for or carry out transactions for their customer concerning the following activities:

    — buying and selling of real estate;

    — managing of customer money, securities or other assets;

    — management of bank, savings or securities accounts;

    — organization of contributions for the creation, operation or management of companies;

    — creation, operation or management of legal persons or arrangements, and buying and selling of business entities.

    FBR explains accountant as sole practitioners, partners or employed professionals within professional firms when they prepare for or carry out transactions for their client concerning the following activities:

    Accountancy services – when carryout monetary transactions for their customers concerning the following activities:

    (I) managing, operating, buying and selling of real estate, legal persons and legal arrangements and preparing documents therefore;

    (II) managing of client money, securities or other assets;

    (III) managing bank, savings or securities accounts; or

    (IV) organizing contributions for the creation, operation or management of companies

    Trust and company formation services – when they carry out monetary transactions or services for a client concerning the following activities:

    (I) acting as a formation agent of legal persons;

    (II) acting as or arranging for another person to act as a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons;

    (III) providing a registered office, business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement;

    (IV) acting as or arranging for another person to act as a trustee of a trust or performing the equivalent function for another form of legal arrangement; or

    (V) acting as or arranging for another person to act as a nominee shareholder for another person.

  • Cash paid for housing unit above Rs2 million required to be reported under AML/CFT: FBR

    Cash paid for housing unit above Rs2 million required to be reported under AML/CFT: FBR

    ISLAMABAD: Every cash transaction for sale and purchase of a housing unit of above Rs2 million is required to be reported under anti-money laundering (AML) / Counter Financing of Terrorism (CFT) to comply with conditions of Financial Action Task Force (FATF), the Federal Board of Revenue (FBR) said on Monday.

    The FBR issued guidelines to provide guidance to real estate agents (REAs) in implementing and complying with requirement in AML/CFT regime.

    The FBR said that currency transaction report (CTR) is required to be submitted when a developer receives cash or bearer negotiable instruments Rs2 million and above for selling real estate e.g. developer sells directly to buyer and receives direct cash payments.

    Similarly, a developer pays with cash or bearer negotiable instruments Rs2 million and above for buying real estate e.g. property developer or builder pays for purchase of real estate for development.

    Likewise, a broker receives or pays in case Rs2 million and above to be used subsequently in the purchase of real estate e.g. broker is a buyer’s agent who receives cash to be used subsequently to pay deposit/ or a settlement (either receipt or subsequent use may meet the CTR threshold).

    However, real estate agent would not be required to file any CTR if all financial transactions are via wire transfers. If REA pays cash to sales staff as remuneration over the threshold, or to a supplier, or purchase of an asset such as a motor vehicle, it would not be subject to CTR filing. They would not be considered as buying and selling real estate.

    The FBR said that the reason REAs are subject to the FATF standards and AML/CFT measures is because the real estate sector provides attractive assets for persons to launder funds from criminal activities given the large sums involved. “There are many example of criminals or corrupt officials using funds acquired from illegal activities to purchase real estate. REAs and their salespersons help customers to transact real properties and this could involve or facilitate the movement of large amounts of funds, sometimes across international boundaries. Real estate may also be involved with the financing of terrorism as terrorist groups may buy or sell real estate.”

    Pakistan’s AML/CFT regulatory regime is strongly informed by the international AML/CFT standards promulgated by the FATF. The FATF is an international task force established in 1989 to develop international standards to combat ML, TF and the financing of proliferation (PF). The FATF published a revised set of 40 Recommendations on AML/CFT measures in 2012, which are being continuously updated.

    Pakistan is currently under the FATF International Cooperation Review Process (ICRG) “Jurisdictions under Increased Monitoring” or “Grey list” process. Pakistan has committed to working with the FATF to address strategic deficiencies to counter ML and TF. Pakistan has also committed to improving its broader compliance with the FATF standards as part of its membership with the APG.

    There is a definition of a REA under both the AMLA and AML/CFT regulations, as extracted below:

    – AMLA, Section 2.Definitions (xii) (a)

    (a) real estate agents, including builders and real estate developers, when performing the prescribed activities in the prescribed circumstances and manner;

    -FBR AML/CFT Regulations for DNFBPs in Section 2.Definitions (n):

    (n) “Real Estate Agent” includes builders, real estate developers and property brokers and dealers when execute a purchase and sale of a real property, participate in a real estate transaction capacity and are exercising professional transactional activity for undertaking real property transfer;

    While the FBR AML/CFT Regulations for DNFBPs identifies four categories of REAs, in reality, your business could include all four with different business lines, or your real estate agency business is just brokerage.

  • FBR officers to be deputed at FAFT secretariat

    FBR officers to be deputed at FAFT secretariat

    Officers from the Federal Board of Revenue (FBR) will be posted at the Financial Action Task Force (FATF) Secretariat on a deputation basis.

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  • IR officers given powers to check dirty money in transactions of jewelers, real estate, accountants

    IR officers given powers to check dirty money in transactions of jewelers, real estate, accountants

    ISLAMABAD: The Federal Board of Revenue (FBR) has granted enhanced powers to Inland Revenue (IR) officers to closely monitor transactions conducted by jewelers, real estate agents, and accountants in an effort to curb money laundering activities.

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