Pakistan addressed 14 out of 27 FATF Action Plan items,says Hafeez Sheikh


ISLAMABAD, July 10 :Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh said Pakistan continued to ensure the earliest completion of the Financial Action Task Force (FATF) Action Plan through increasing the effectiveness of its AML / CFT Regime.

The adviser was delivering a keynote statement through Zoom to the High Level Panel on International Financial Accountability, Transparency and Integrity (FACTI) for Achieving the 2030 Agenda to contribute to the implementation of the 2030 Agenda for Sustainable Development.

Hafeez Shaikh said Pakistan had already addressed 14 out of 27 FATF Action Plan items while substantial progress had been made in addressing the remaining 13 ones.

Hafeez Shaikh told the panel that Pakistan had made considerable progress in addressing the recommended actions of Mutual Evaluation Report, which included 15 Legal Amendments to meet technical compliance, updation of National Risk Assessment on ML/CT, implementation of Anti-Money Laundering/Combating the Financial Terrorism (AML/CFT) measures on DNFBPs, CDNS and Pakistan Post, broadening the sanction regime etc.

He said, Pakistan had taken various measures in recent years to contain illicit financial flows through strengthening of the AML/CFT regulations on Customer Due Diligence (CDD) and Know Your Customer (KYC)/ and other AML/CFT instructions to financial institutions have been brought in line with FATF standards.

To further align with the international standards, he said, the AML Act had been amended to include Tax Offences as predicate offences. A range of predicate offences had been added to the schedule of AML Act, to include serious offences, including corruption, narcotics, terrorism and human trafficking, he added.

Dr Abdul Hafeez Shaikh said violations of Section 4(1) (un-authorized FX business) and Section 5 (Illegal transfers) of Foreign Exchange Regulation Act ( FERA), 1947 had been incorporated into the schedule of Anti Money Laundering (AML) Act, 2010 in terms of which those offences might also be punishable.

He said amendments to Protection of Economic Reforms Act (PERA) 1992 had been incorporated to restrict feeding of foreign currency accounts by non-tax filer Pakistani residents.

The adviser said Pakistan had launched Pakistan Remittances Initiative (PRI) to facilitate inflow of home remittance into the country through formal channels. Resultantly, Pakistan had registered growth in remittances during the last decade, rising from $ 6.4 billion in FY08 to $ 23 billion in FY20.

Automation of Electronic Import Form (EIF) and Electronic Export Form (EEF) by banks through Pakistan Customs’ software – Web Based One Customs (WeBOC) to synchronize import and export of goods and payments by banks were also some of steps taken by the government to further streamline the processes, he added.

The adviser said the State Bank of Pakistan and the Federal Investigation Agency were continuing to identify illegal MVTS (hawala/ hundi operators) and take measures, including closure, investigation and prosecution these operators.

He called upon the Panel to look into how multinational corporations (MNCs) minimize their tax liabilities to revenue authorities in their country of operations.

He observed that MNCs had devised sophisticated financial and operational models enabling them to manoeuvre their way through tax systems and shift their profits to low tax jurisdictions and, in many instances, tax havens that are highly opaque in nature.

He said the Panama Papers highlighted the myriad ways in which the rich could exploit secretive offshore tax regimes – and widen the gulf between the rich and the poor. Abuse of anonymous shell companies was among the reasons why many countries were facing greater challenges today in the face of the COVID-19 pandemic. For years, they had enabled corruption, fraud and tax evasion, he added.

Hafeez Shaikh also drew the attention of the panel to a research by Transparency International showing that the overall level of compliance on the part of countries with beneficial ownership transparency standards was low, as many countries had failed to take adequate measures such as the establishment of registers.

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