FATF- Financial Ac on Task Force

Its Affiliate groups are in every con nent. In asia it has Asia Pacific Group
It assists FATF in Money laundering and terror finance
Phenomena:

One of the major sources of money laundering and terror finance is Money Exchangers or local Haundi
Hawala
largee amount of money handed over to money exchanger in Pakistan is corrup on money and tax
evasion money

the source of money in UAE as;

1. Pakistani Diaspora (working/ labour class) send money through either money exchanger or through
banks
2. Terror Finance - in the name of Sectarian Jihad
Sectarian Terrorism (Kashmir , afghanistan and terrorist organiza on in Pakistan )
The labour money and terror finance is distributed to Tax evaders and corrupt
while the corrupted money and tax evaded money is given to either the families of labour class and
terrorists
The other big source is Fake accounts (eg the account belongs to A and money present is of B)
And the process of money laundering through fake accounts is divided in to tree parts
three*
1. Placement - placing money in to par cular account (open accounts on fake iden es)
2.Layering - the transfer of money into various accounts, while dividing them in to smaller por ons
and repeated transfers
this is done to lose the money trail
If the amount is very huge it is sent to other countries in the same manner
3.Integra on - mix the black money with white money a er layering.
1992 - law passed - Money Transac on lasted ll 2017. if anyone brings back money in to Pakistan
from abroad source will not be asked from him/ her
terrorist organisa ons opens accounts on fake iden es, mostly money comes from idle east and a
li le but from Europe and iran
and the real beneficiaries of such accounts are terrorist organiza ons
Third Big Source is Interna onal Trade
some of the importers have been involved in money laundering and terror finance both
how Interna onal Trade is conducted?
le er of credit is issued to the importer
by the bank in which the importer has an account
and then this le er of credit (LOC) is sent to the exporters who will receive the imported goods -
who then submits it to HIs/Her own account (Bank)
then the two banks interact with each other and money is transferred to the par cular country this
is the legal way of Trading
How some importers misuse this ?
by over pricing the Products
This is done to send Dollar Abroad
this money is usually of Corrupt and tax evaders

the agreement is done by a mutual understanding and the excess amount is handed back over
this understanding and agreement is therefore kept secret
Some importers are also involved in Terror Finance
How?
In such kind of imports the legal Bank channel is not used that mean LOC is not issued
rather the Terror finance accumalated in middle east and Iran in the name of jihad from different
sources for the terror organiza ons , are used to Purchase different products which are then sent to
Pakistan and the money goes to Terrorist organiza ons
* the products are sold in Pakistan
Smuggling of Money - (Money Laundering)
Foreign currency smuggled to foreign countries from pakistan
1. Celebri es are involved in money laundering
2. The crew of the air planes and ships are involved in money laundering
3. tourist companies are also involved
Money (Foreign currency) is smuggled to Afghanistan and Iran why?
because the border has been porus. people have been moving freely on the border
money is also smuggled Via sea. mostly to arab countries and African through Karachi

paksitan is placed in grey list of money laundering

in June 2018 Paksitan was placed in Grey list of FATF reasons being money laundering and terror
Finance, while the poor criminal jus ce system of Pakistan was also ques oned
the poli cs was also a major reason of Paksitan's inclusion to this list
the militants are set set free by the courts of Pakistan due to lack of evidences against them, and the
court is bound to give judgement on tangible evidences
but the inves ga on process of Pakistan is weak and no evidences are collected against militants
Countries like India UK France germany and FATF have repeatedly raised ques ons about this
The poli cal reasons
1. US played a key role in placing Pakistan in this list
as the Pak- US rela onship deteriorated Trump added that Paksitan is the part of Afghan problem
not the solu on
Trump banned the Aid
Coali on support Fund was banned
pakistan said ‘no more do more’

Pakistan Foreign minister said that US has lost the war in Afghanistan and wants to blame Pakistan
the US lead the process of placing Pakistan in grey list of FATF which was also supported by UK
France and Germany
India played a key role in aggrava ng the process
pla orm of APG was used by India to defame Pakistan.
India pushed the narra ve of presence of terrorist organisa ons in Pakistan are responsible for
a acks in afghnistan and india
this worsened the situa on for pakistan
Pakistan placed in fa grey list
we needed three votes to stop our inclusion to the list. Turkey stood by Pakistan. but china and KSA
backed out probably due to interna onal pressure
There are no direct implica ons of being added to the list but it has a massive poli cal cost
the hard image of Pakistan being projected
resultedly Pakisatan got isolated
if God Forbid Pakistan is Black listed by FATF
it will have serious Economic repracu ons along with poli cal
foreign investment will be drained from Pakistan. China will be forced to stop CPEC project
interna onal monetary bodies will not given laons to Pakistan
moreover Pakistan will face sanc ons , and Pakistan will not be allowed to export its products
the economy of Pakistan is already weak and will not sustain without the support of Foreign
investement and loans
Recommenda ons:
FATF made 27 Demands from Pakistan
and Pakistan has successfully demanded 21 of these while the work is in progress for the other six
1. crackdown was carried out across Pakistan against money exchanger
those who were found guilty were not only sealed but the owners are imprisoned
not guilty money exchangers were registered
biggest crack down was done in Karachi Peshawar que a , dera ghazi khan and chamman

Multan*
2. the banking system is dras cally improved in last two years. to avoid fake accounts, electronic
thumb impression (bio metrics) is compulsory
the role of state bank was improved
the large transac ons are carefuly watched
for a transac on reason and sources are compulsory
more in the banking sector , FBR is given strict instruc ons and responsibili es to over look money
laundering and terror finance
this is called FATF department and its offices are opened in all major ci es of Pakistan - Peshawar
Karachi , multan que a lahore
unnamed business - Baynami proper es and business will be confiscated

the cons tu on made by empowering FBR , FIA NAB and security and exchange commission of
pakistan
major penal es are imposed and are made harsher
6 points s ll le
reaming me is Feburary 2021

the documenta on of economy need to be done

35 % + economy is no documented
not*
if these and more steps are taken Pakistan will come out of grey list
which is very probable
hence FATF is a blessing in disguise
a great por on remintances came from money exchangers which is now documented and registered
which is a huge step forward
but all thiese steps are not only FATF demands but also has long term benefits for pakistan