|
|
FATF Statement re AML Strategic Deficiencies:
Date: 16 February 2012
Pakistan has taken significant steps towards improving its
AML/CFT regime, including by enhancing the capacity of its FIU,
approving an AML/CFT strategy, and by ensuring training is
provided to relevant stakeholders. Despite Pakistan’s high-level
political commitment to work with the FATF and APG to address its
strategic AML/CFT deficiencies, Pakistan has not made sufficient
progress in implementing its action plan, and certain AML/CFT
deficiencies remain. Specifically, Pakistan needs to enact
legislation to ensure that it meets the FATF standards regarding
the terrorist financing offence (SR II) and the ability to identify,
freeze, and confiscate terrorist assets (Special Recommendation
III). The FATF encourages Pakistan to address the remaining
deficiencies and continue to implement its action plan, including
by demonstrating effective regulation of money service providers
and implementing effective controls for cross-border cash
transactions (Special Recommendation VI and Special
Recommendation IX).
____________________________________________________
Sanctions:
None applicable, however the UK government has had a stated
policy on exports to nuclear and nuclear-related end users in
India and Pakistan since March 2002.
____________________________________________________
Offshore Jurisdiction Blacklists:
None applicable.
____________________________________________________
US State Department Money Laundering Report - 2012:
Pakistan continues to suffer from financial crimes related to
narcotics trafficking, terrorism, smuggling, tax evasion, corruption,
counterfeit goods and fraud. Pakistani criminal networks play a
central role in the transshipment of narcotics and smuggled goods
from Afghanistan to international markets. The abuse of the
charitable sector, trade-based money laundering, money
exchange companies, hawala/hundi, and bulk cash smuggling are
common methods used to launder money in Pakistan and the
region. Pakistan’s real estate sector is also a popular destination
for illicit funds, as many real estate transactions are poorly
documented. Pakistan does not have firm control of its borders
with Afghanistan, Iran or China, which facilitates the flow of
smuggled goods to and from the Federally Administered Tribal
Areas and Baluchistan.
Money laundering often occurs in Pakistan in both the formal and
informal systems. Fraudulent invoicing is typical in hawala/hundi
counter-valuation schemes. Legitimate remittances from Pakistani
expatriates residing abroad flow through the formal banking
sector, licensed money exchange businesses, and hawalas. Since
the start of the calendar year through October remittances totaled
$14 billion, and since March have averaged roughly $1 billion per
month. The authorities do not provide an estimate of remittances
that flowed through informal channels.
Pakistan was first publicly identified by the Financial Action Task
Force (FATF) in February 2008 for deficiencies in its anti-money
laundering/counter terrorist financing (AML/CFT) regime. While
Pakistan has taken some steps to improve its AML regime, the
FATF continues to note Pakistan’s failure to adequately implement
its action plan and correct AML/CFT deficiencies, particularly its
terrorism finance law.
For additional information focusing on terrorism financing, please
refer to the Department of State’s Country Reports on Terrorism,
which can be found here: http://www.state.gov/j/ct/rls/crt/
Do Financial Institutions engage in currency transactions related
to international narcotics trafficking that include significant
amounts of US currency; currency derived from illegal sales in the
U.S.; or that otherwise significantly affect the U.S.: YES
Criminalization of Money Laundering:
“All serious crimes” approach or “list” approach to predicate
crimes: List approach
Legal persons covered: criminally: YES civilly: YES
Know-your-customer (KyC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: YES
KYC covered entities: Banks, agricultural credit institutions, money
exchangers, accountants, notaries, gaming centers, auto dealers
and securities dealers
Suspicious Transaction Reporting (STR) Requirements:
Number of STRs received and time frame: 535 from July 2010 to
May 31, 2011
Number of CTRs received and time frame: 138 from January 2009
through December 2010
STR covered entities: Banks, agricultural credit institutions,
money exchangers, notaries, gaming centers, and securities
dealers
Money Laundering Criminal Prosecutions/Convictions:
Prosecutions: Four from January 2009 to October 2010
Convictions: None in 2010
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: NO
With other governments/jurisdictions: YES
Pakistan is a member of the Asia/Pacific Group on Money
Laundering (APG), a Financial Action Task Force (FATF)-style
regional body. Its most recent mutual evaluation can be found
here: http://www.apgml.org/documents/docs/17/Pakistan%
20MER%20-%20final%20version.pdf
Enforcement and implementation issues and comments:
To gain more oversight of the informal money transfer sector, the
State Bank of Pakistan (SBP) requires all money exchange
companies to obtain licenses and meet minimum capital
requirements. As a result, it is illegal for money exchange
companies, referred to as hawala/hundi, to operate without a
license; however, few hawalas have been registered by the
authorities, and unlicensed hawaladars continue to operate
illegally throughout Pakistan (particularly in Peshawar and
Karachi). While the SBP has implemented the licensing of all
money exchange companies and hawalas, the enforcement
environment is not commensurate with SBP’s regulations.
Shortcomings in the enforcement of the regulations, particularly in
the movement of cash, makes Pakistan’s informal financial sector
consistently vulnerable to abuse by illicit actors.
Pakistan continues to have serious deficiencies in its AML regime.
To address these it must: remove remaining inadequacies with
regard to the criminalization of money laundering; demonstrate
effective regulation of money service providers, including an
appropriate sanctions regime and increasing the range of ML
preventive measures for these services; and improve and
implement effective controls for cross-border cash transactions.
Pakistan needs to demonstrate that not only does it have AML
laws on the books, but that these laws are enforced. To date,
Pakistan has a poor track record. Between January 2009 and
October 2010 there have been only four prosecutions and zero
convictions under the AML law due to limited resources and lack
of capacity.
____________________________________________________
US State Dept Narcotics Report 2012 (introduction):
Pakistan remained a major transit country for opiates and hashish
originating in Afghanistan in 2011. Pakistan also continues to be a
producer of opiates from illicit poppy grown mostly in the Federally
Administered Tribal Areas (FATA). Drug trafficking and addiction
were associated with instability and lack of government control on
Pakistan’s 1,500-mile (2,430km) border with Afghanistan. The
rugged, remote, border separating the FATA and Baluchistan
province from Afghanistan is ideally suited for drug traffickers,
who smuggle tons of heroin and opium across the border
annually. Heavy traffic at the three official border crossing points
contributes to the difficulty of surveillance and detection efforts.
The border has dozens of unsupervised crossing points and is
crisscrossed by unmapped and uncontrolled trails. The sheer
volume of drugs transiting this country of approximately 185
million people, along with its deep-seated economic and social
problems, fuels a domestic drug addiction problem. The country’s
law enforcement and judicial structures are under-financed and
often fail to cooperate among themselves. Corruption in Pakistan
is widespread.
The Pakistani Taliban and allied militant groups remained an
active and determined insurgent force in the tribal areas in the
northwestern area of the country that borders Afghanistan. The
ongoing violence and military necessities relegated
counternarcotics to a secondary effort in these regions. Pakistan’
s federal Anti Narcotics Force (ANF), the government’s lead anti-
drug agency, rarely extended its reach into the tribal areas. The
ANF, along with the Frontier Corps, was present in Baluchistan,
which borders Afghanistan’s major drug producing provinces,
Helmand and Kandahar. Given the enormous amount of sparsely
policed territory and the nature of the terrain, law enforcement
and other barriers to trafficking were spread thin.
Pakistani authorities actively endeavored to intercept the flow of
narcotics and continued to make seizures, some fairly significant
in size and scope. The Government of Pakistan (GOP)
recognizes that the flow of drugs through the country is not just
the problem of destination countries, but fuels a growing addiction
problem within Pakistan itself. Pakistan continued its cooperation
with the U.S. government and other governments on bilateral
counternarcotics initiatives. The United Nations Office on Drugs
and Crime (UNODC) has a presence in Pakistan, and worked
closely with the GOP and USG on counternarcotics efforts over
the past year. Pakistan is a party to the 1988 UN Drug
Convention.
For Full report, click here
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2)
Pakistan is a source, transit, and destination country for men,
women, and children subjected to forced labor and sex trafficking.
The country’s largest human trafficking problem is bonded labor,
concentrated in the Sindh and Punjab provinces in agriculture
and brick making, and to a lesser extent in the mining, carpet-
making, glass bangle, and fishing industries. Bonded labor also
exists in the fisheries, mining, and agricultural sectors of
Balochistan. Estimates of bonded labor victims, including men,
women, and children, vary widely. The Asian Development Bank
estimates that 1.8 million people – one percent of the population –
are bonded laborers. In extreme scenarios, when bonded laborers
attempt to seek legal redress, landowners have kidnapped them
and their family members. Boys and girls are also bought, sold,
rented, or kidnapped to work in organized, forced begging rings,
domestic servitude, and prostitution. Recent press stories
reported on the violence in child domestic servitude, including
sexual abuse, torture, and death. Illegal labor agents charge high
fees to parents with false promises of decent work for their
children, who are later exploited and subject to forced labor in
domestic servitude, unskilled labor, small shops, and other
sectors. Disabled children and adults are forced to beg in Iran.
Girls and women also are sold into forced marriages; in some
cases their new “husbands” move them across Pakistani borders
and force them into prostitution. NGOs and police reported
markets in Pakistan where girls and women are bought and sold
for sex and labor. Non-state militant groups kidnap children or
coerce parents with fraudulent promises into giving away children
as young as 12 to spy, fight, or die as suicide bombers in
Pakistan and Afghanistan. The militants often sexually and
physically abuse the children and use psychological coercion to
convince the children that the acts they commit are justified. News
organizations, NGOs, and international organizations reported
that the 2010 floods contributed to increased trafficking in
Pakistan.
Many Pakistani women and men migrate voluntarily to the Gulf
States, Iran, Turkey, South Africa, Uganda, Greece, and other
European countries for low-skilled employment such as domestic
work, driving, or construction work; once abroad, some become
victims of labor trafficking. False job offers and high fees charged
by illegal labor agents or sub-agents of licensed Pakistani
overseas employment promoters increase Pakistani laborers’
vulnerabilities and some laborers abroad find themselves in
involuntary servitude or debt bondage. Employers abroad use
practices including restrictions on movement, nonpayment of
wages, threats, and physical or sexual abuse. Moreover,
traffickers use violence, psychological coercion, and isolation,
often seizing travel and identification documents as a means to
coerce Pakistani women and girls into prostitution in the Middle
East. There are reports of child sex trafficking between Iran and
Pakistan. Pakistan is a destination for men, women, and children
from Afghanistan, Iran, and, to a lesser extent, Bangladesh, who
are subjected to forced labor and prostitution. Many traffickers
who force Pakistanis into prostitution or labor abroad know their
victims personally.
The Government of Pakistan does not fully comply with the
minimum standards for the elimination of human trafficking, but is
making significant efforts to do so, despite the severe floods the
country experienced in 2010. The government continued its
programs to prevent and combat bonded labor, but did not
criminally convict any bonded labor offenders or officials who
facilitated trafficking in persons. The government continued to
lack adequate procedures to identify trafficking victims among
vulnerable populations and adequate protection for these victims.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2010
Overview: In 2010, Pakistan continued to experience high levels
of terrorism and Pakistan-based terrorist organizations continued
to threaten internal, regional, and global security. Violence
resulted from both political and sectarian conflicts throughout the
country, with terrorist incidents occurring in every province. While
government authorities arrested many alleged perpetrators of
terrorist violence, few convictions resulted. The Pakistani military
continued to conduct operations in areas with known terrorist
activity but was unable to expand its operations to all areas of
concern. Increased sectarian violence between the Sunni and
Shia communities and against religious minority communities also
resulted in numerous attacks with high casualties. These attacks
continued the trend of employing suicide bombers and remotely
detonated explosives to perpetrate violence. Attacks using similar
methods were also carried out against government and police
facilities.
Pakistan, particularly the Federally Administered Tribal Areas
region and the Khyber Pakhtunkhwa province, continued to be
used as a base for terrorist organizations operating in Pakistan
and Afghanistan, and Pakistani security forces undertook
substantial efforts to counter these threats. These organizations
recruited, trained, and conducted fundraising for terrorist
operations in Pakistan, and used Pakistan as a transit point for
cross border movement to Afghanistan and abroad. Pakistan's
Frontier Corps and military initiated large-scale counterinsurgency
operations in Mohmand, Khyber Pakhtunkhwa, and Orakzai, and
added one battalion in Khyber Pakhtunkhwa. Pakistan's ability to
continue robust operations was negatively impacted by the need
to divert resources to provide relief from the 2010 floods, which
caused severe, long-term damage in Pakistan. The ability to
establish and maintain security in densely populated urban areas
or areas with a historically poor security presence also remained
a major challenge for Pakistan.
When Pakistan conducted operations to eliminate safe havens in
the country, it often lacked the capability to ensure these areas
remained under the control of Pakistan's security agencies. Given
its inability to pursue the complete elimination of the terrorist
presence and fully eliminate terrorist safe havens, Pakistan
utilized a strategy to conduct limited operations to "contain"
terrorist operatives in known areas of activity. Pakistan's civilian
government and military departments cooperated and
collaborated with U.S. efforts to identify and counter terrorist
activity in Pakistan, and the United States continued to engage
Pakistan to ensure it had the will and capacity to confront all
extremist elements within its borders.
2010 Terrorist Incidents: The coordination, sophistication, and
frequency of suicide and other bombings continued unabated in
2010. Pakistan experienced hundreds of bomb blasts, suicide
attacks, and sectarian violence, resulting in more than 2,000 dead
and scores more injured. Known terrorist organizations such as
Tehrik-e-Taliban (the "Pakistani" Taliban) and Lashkar-e-Jhangvi
claimed responsibility for a number of attacks. The Afghan
Taliban, Lashkar-e-Tayyiba and al-Qa’ida also have a significant
presence in Pakistan and maintained the capability to plan,
influence, and assist violent extremist organizations within
Pakistan and regionally. 2010 Terrorist Incidents carried out
against civil society, religious groups, and government and police
officials and offices during 2010 included:
* On February 3, 10 persons were killed and 70 injured when a
suicide bomber attacked a Pakistani Frontier Corps convoy en
route to an inauguration ceremony for a new school for girls in
Maidan in Khyber Pakhtunkhwa.
* On April 28, four policemen were killed and 13 others, including
eight policemen, were injured in a suicide car bomb blast in
Peshawar at the U.S. Consulate.
* On May 28, over 80 persons were killed and more than 120
injured in Lahore in two separate but simultaneous suicide attacks
utilizing assault rifles and grenade attacks. The attacks targeted
places of worship of the Ahmadiyya Muslim community.
* On October 2, Dr. Mohammad Farooq Khan, a psychiatrist,
religious scholar, and vice-chancellor of Swat Islamic University,
was gunned down in his clinic. Farooq was strongly anti-Taliban
and frequently took part in television talk shows during which he
criticized militants and described suicide attacks as “un-Islamic”.
The Pakistani Taliban claimed responsibility.
* On December 7, the Chief Minister of Balochistan escaped a
suicide attack that injured 10 people but left the Minister
unharmed. Three organizations, the Pakistani Taliban, the Baloch
Liberation United Front, and Lashkar-e-Jhangvi Alami (Lashkar-e-
Jhangvi International), claimed responsibility for the attack.
Legislation and Law Enforcement: While Pakistan's law
enforcement community continued to pledge to prosecute those
responsible for terrorist acts inside Pakistan, a 2010 review by the
United States of Pakistan's Anti-Terrorism Court rulings revealed
that Pakistan remained plagued an acquittal rate of approximately
75 percent. The review, in conjunction with information provided
by Pakistani law enforcement partners, painted a picture of a legal
system almost incapable of prosecuting suspected terrorists. The
review determined that the accused in numerous high-profile
terrorism incidents involving U.S. victims had all been acquitted by
the Pakistani legal system.
The Anti-Terrorism Bill 2010, proposed on July 28, 2010,
remained before Pakistan's parliament. It proposes 25
amendments to Pakistan's original anti-terrorism legislation, the
Anti-Terrorism Act of 1997, including provisions that broaden the
definition of terrorism, expand the authority of law enforcement
agencies investigating terrorist incidents, authorize detention of
subjects for 90 days before presenting them before a court, and
allow increased electronic surveillance and wiretapping.
The U.S. Department of Justice continued to offer assistance to
the Government of Pakistan to improve its existing
counterterrorism laws. Under the U.S.-Pakistan Strategic
Dialogue, Secretary of State Clinton and Pakistan's Foreign
Minister Qureshi launched the Law Enforcement and
Counterterrorism working group as a platform to discuss ways to
increase cooperation. The U.S. Embassy in Islamabad has also
implemented a diverse law enforcement training program for
federal, provincial, and local law enforcement that included
training in crime scene investigation, post blast investigations, and
training specifically for counterterrorism personnel and bomb
disposal units.
U.S. officials continued to monitor court proceedings involving
high-profile terrorist attacks, such as the cases involving seven
Pakistanis currently on trial for the 2008 Mumbai attack that killed
166 people, including six Americans; and the three Pakistanis on
trial for assisting Faisal Shahzad with the attempted May 1, 2010
bombing of Times Square. The Federal Bureau of Investigation
has assisted with the respective prosecutions.
Pakistan continued to process travelers on entry and departure at
13 international airports, five land border sites, four seaports, and
two train stations with the Personal Identification Secure
Comparison and Evaluation System (PISCES).
Countering Terrorist Finance: Pakistan strengthened its
counterterrorist finance regime and committed to making
additional improvements. Pakistan's terrorist financing law is
ambiguous on key points, however, and the country’s
implementation of UNSCR 1267 was incomplete.
The informal financial sector continued to play a significant role in
Pakistan's legal and illicit economies, but the government has
taken substantial steps to curb the role of informal financial
service providers in servicing remittances. Through the Pakistan
Remittance Initiative, the government has steadily increased the
volume of remittances coming through authorized channels during
the past three years, improved Pakistan's balance of payments,
and enhanced financial transparency. The government has also
prosecuted unregistered, illegal money remitters. During the past
year, Pakistan took a substantial step toward strengthening its
anti-money laundering/countering terrorist finance (AML/CTF)
regime. In March, the parliament passed the Anti-Money
Laundering Act, which replaced a temporary ordinance and
solidified the Financial Monitoring Unit's standing as a national
center for the collection and dissemination of suspicious
transaction reports related to money laundering and terrorist
financing. Pakistan also strengthened financial regulations, in
particular the requirements to conduct due diligence and maintain
internal controls.
As an active participant in the Asia/Pacific Group on Money
Laundering, Pakistan has been under review by the Financial
Action Task Force (FATF) because of deficiencies in its AML/CTF
regime. In June, the Finance Minister committed Pakistan to an
FATF action plan, which outlined a series of steps the government
will take to remedy these deficiencies.
Despite progress, deficiencies in Pakistan's AML/CTF regime
remained. Notably, the criminalization of the financing of terrorist
acts committed against foreign governments and international
organizations was ambiguous, as was the criminalization of
financing groups that have not been explicitly banned by the
government or designated by the UN. Although Pakistan did not
make substantial progress toward removing the ambiguity in the
law this year, the Government of Pakistan committed to doing so
in its FATF action plan.
Another significant concern was Pakistan's weak implementation
of UNSCR 1267. UN-designated terrorist organizations were able
to skirt sanctions simply by reconstituting themselves under
different names. They made little effort to hide their connections
to the old groups and gained access to the financial system using
new names.
Regional and International Cooperation: Pakistan continued to
cooperate in regional and international counterterrorism forums.
However, India-Pakistan counterterrorism cooperation was lacking
in 2010.
Significant cooperation was documented during the latter part of
2010 in support for Project Global Shield, a World Customs
Organization (WCO) Counter Improvised Explosive Device (IED)
Project seeking to identify the global movement of precursor
chemicals (some dual use) that are used in the manufacture of
IEDs. A multi-country conference held at the WCO Headquarters
in Brussels in October, launched this project, which commenced
on November 1.
As a follow up to the launch of Project Global Shield, the Pakistan
Federal Board of Revenue (Customs) and UN Office of Drugs and
Crime organized a training conference in Karachi, Pakistan in
December, which provided training to customs officers and anti-
narcotics officers in the identification and safe handling of
precursor chemicals as well as training in the targeting of
container shipments that might have inappropriately declared
their contents.
In January, the foreign ministers of Pakistan, Afghanistan, and
Iran agreed on a roadmap to confront jointly the challenges of
violent extremism and terrorism facing the region by signing the
Islamabad Declaration, which was described as a guide to
stability, security, and development in the region through mutual
cooperation. Pakistani Foreign Minister Qureshi said the three
sides agreed to confront the common challenges of illicit weapons
and drug money through a comprehensive approach. The three
nations also agreed to look into the possibilities of developing
regional approaches to these challenges.
Countering Radicalization and Violent Extremism: The
Government of Pakistan has realized that counter-radicalization
through non-military means is a critical component to long-term
success against violent extremism, and has initiated certain
counter-radicalization efforts in 2010. As part of these efforts, the
Ministry of Culture announced plans to set up a TV channel
focusing on culture and traditions of the country with the objective
of countering violent extremism. The channel reportedly will cover
various aspects of Pakistani culture and traditions including folk
music, the theatre industry, regional dialects and traditions,
archaeological sites, and the history of the region and other
areas, according to the Federal Ministry of Culture.
A school in Malakand, run by the Pakistani army, continued to
rehabilitate Taliban-influenced youth. The UN Children's Fund-
funded school, originally opened in September 2009, provided
free religious education and psychiatric counseling to 85 students
from Swat, a district heavily influenced by terrorist groups. The
students were 13 to 18 years old and few had finished secondary
school. The project is the first of its kind in Pakistan.
On July 28, President Asif Ali Zardari called approximately 30
Islamic scholars and representatives of minority communities to
his official residence to discuss minority rights and interfaith
harmony in the country. The Ministry of Minorities Affairs
established interfaith committees at the district level to meet
monthly to address issues of religious tolerance and interfaith
dialogue.
____________________________________________________
Links:
Worldwide AML Legislation (International Bar Association)
Date: 16 February 2012
Pakistan has taken significant steps towards improving its
AML/CFT regime, including by enhancing the capacity of its FIU,
approving an AML/CFT strategy, and by ensuring training is
provided to relevant stakeholders. Despite Pakistan’s high-level
political commitment to work with the FATF and APG to address its
strategic AML/CFT deficiencies, Pakistan has not made sufficient
progress in implementing its action plan, and certain AML/CFT
deficiencies remain. Specifically, Pakistan needs to enact
legislation to ensure that it meets the FATF standards regarding
the terrorist financing offence (SR II) and the ability to identify,
freeze, and confiscate terrorist assets (Special Recommendation
III). The FATF encourages Pakistan to address the remaining
deficiencies and continue to implement its action plan, including
by demonstrating effective regulation of money service providers
and implementing effective controls for cross-border cash
transactions (Special Recommendation VI and Special
Recommendation IX).
____________________________________________________
Sanctions:
None applicable, however the UK government has had a stated
policy on exports to nuclear and nuclear-related end users in
India and Pakistan since March 2002.
____________________________________________________
Offshore Jurisdiction Blacklists:
None applicable.
____________________________________________________
US State Department Money Laundering Report - 2012:
Pakistan continues to suffer from financial crimes related to
narcotics trafficking, terrorism, smuggling, tax evasion, corruption,
counterfeit goods and fraud. Pakistani criminal networks play a
central role in the transshipment of narcotics and smuggled goods
from Afghanistan to international markets. The abuse of the
charitable sector, trade-based money laundering, money
exchange companies, hawala/hundi, and bulk cash smuggling are
common methods used to launder money in Pakistan and the
region. Pakistan’s real estate sector is also a popular destination
for illicit funds, as many real estate transactions are poorly
documented. Pakistan does not have firm control of its borders
with Afghanistan, Iran or China, which facilitates the flow of
smuggled goods to and from the Federally Administered Tribal
Areas and Baluchistan.
Money laundering often occurs in Pakistan in both the formal and
informal systems. Fraudulent invoicing is typical in hawala/hundi
counter-valuation schemes. Legitimate remittances from Pakistani
expatriates residing abroad flow through the formal banking
sector, licensed money exchange businesses, and hawalas. Since
the start of the calendar year through October remittances totaled
$14 billion, and since March have averaged roughly $1 billion per
month. The authorities do not provide an estimate of remittances
that flowed through informal channels.
Pakistan was first publicly identified by the Financial Action Task
Force (FATF) in February 2008 for deficiencies in its anti-money
laundering/counter terrorist financing (AML/CFT) regime. While
Pakistan has taken some steps to improve its AML regime, the
FATF continues to note Pakistan’s failure to adequately implement
its action plan and correct AML/CFT deficiencies, particularly its
terrorism finance law.
For additional information focusing on terrorism financing, please
refer to the Department of State’s Country Reports on Terrorism,
which can be found here: http://www.state.gov/j/ct/rls/crt/
Do Financial Institutions engage in currency transactions related
to international narcotics trafficking that include significant
amounts of US currency; currency derived from illegal sales in the
U.S.; or that otherwise significantly affect the U.S.: YES
Criminalization of Money Laundering:
“All serious crimes” approach or “list” approach to predicate
crimes: List approach
Legal persons covered: criminally: YES civilly: YES
Know-your-customer (KyC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: YES
KYC covered entities: Banks, agricultural credit institutions, money
exchangers, accountants, notaries, gaming centers, auto dealers
and securities dealers
Suspicious Transaction Reporting (STR) Requirements:
Number of STRs received and time frame: 535 from July 2010 to
May 31, 2011
Number of CTRs received and time frame: 138 from January 2009
through December 2010
STR covered entities: Banks, agricultural credit institutions,
money exchangers, notaries, gaming centers, and securities
dealers
Money Laundering Criminal Prosecutions/Convictions:
Prosecutions: Four from January 2009 to October 2010
Convictions: None in 2010
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: NO
With other governments/jurisdictions: YES
Pakistan is a member of the Asia/Pacific Group on Money
Laundering (APG), a Financial Action Task Force (FATF)-style
regional body. Its most recent mutual evaluation can be found
here: http://www.apgml.org/documents/docs/17/Pakistan%
20MER%20-%20final%20version.pdf
Enforcement and implementation issues and comments:
To gain more oversight of the informal money transfer sector, the
State Bank of Pakistan (SBP) requires all money exchange
companies to obtain licenses and meet minimum capital
requirements. As a result, it is illegal for money exchange
companies, referred to as hawala/hundi, to operate without a
license; however, few hawalas have been registered by the
authorities, and unlicensed hawaladars continue to operate
illegally throughout Pakistan (particularly in Peshawar and
Karachi). While the SBP has implemented the licensing of all
money exchange companies and hawalas, the enforcement
environment is not commensurate with SBP’s regulations.
Shortcomings in the enforcement of the regulations, particularly in
the movement of cash, makes Pakistan’s informal financial sector
consistently vulnerable to abuse by illicit actors.
Pakistan continues to have serious deficiencies in its AML regime.
To address these it must: remove remaining inadequacies with
regard to the criminalization of money laundering; demonstrate
effective regulation of money service providers, including an
appropriate sanctions regime and increasing the range of ML
preventive measures for these services; and improve and
implement effective controls for cross-border cash transactions.
Pakistan needs to demonstrate that not only does it have AML
laws on the books, but that these laws are enforced. To date,
Pakistan has a poor track record. Between January 2009 and
October 2010 there have been only four prosecutions and zero
convictions under the AML law due to limited resources and lack
of capacity.
____________________________________________________
US State Dept Narcotics Report 2012 (introduction):
Pakistan remained a major transit country for opiates and hashish
originating in Afghanistan in 2011. Pakistan also continues to be a
producer of opiates from illicit poppy grown mostly in the Federally
Administered Tribal Areas (FATA). Drug trafficking and addiction
were associated with instability and lack of government control on
Pakistan’s 1,500-mile (2,430km) border with Afghanistan. The
rugged, remote, border separating the FATA and Baluchistan
province from Afghanistan is ideally suited for drug traffickers,
who smuggle tons of heroin and opium across the border
annually. Heavy traffic at the three official border crossing points
contributes to the difficulty of surveillance and detection efforts.
The border has dozens of unsupervised crossing points and is
crisscrossed by unmapped and uncontrolled trails. The sheer
volume of drugs transiting this country of approximately 185
million people, along with its deep-seated economic and social
problems, fuels a domestic drug addiction problem. The country’s
law enforcement and judicial structures are under-financed and
often fail to cooperate among themselves. Corruption in Pakistan
is widespread.
The Pakistani Taliban and allied militant groups remained an
active and determined insurgent force in the tribal areas in the
northwestern area of the country that borders Afghanistan. The
ongoing violence and military necessities relegated
counternarcotics to a secondary effort in these regions. Pakistan’
s federal Anti Narcotics Force (ANF), the government’s lead anti-
drug agency, rarely extended its reach into the tribal areas. The
ANF, along with the Frontier Corps, was present in Baluchistan,
which borders Afghanistan’s major drug producing provinces,
Helmand and Kandahar. Given the enormous amount of sparsely
policed territory and the nature of the terrain, law enforcement
and other barriers to trafficking were spread thin.
Pakistani authorities actively endeavored to intercept the flow of
narcotics and continued to make seizures, some fairly significant
in size and scope. The Government of Pakistan (GOP)
recognizes that the flow of drugs through the country is not just
the problem of destination countries, but fuels a growing addiction
problem within Pakistan itself. Pakistan continued its cooperation
with the U.S. government and other governments on bilateral
counternarcotics initiatives. The United Nations Office on Drugs
and Crime (UNODC) has a presence in Pakistan, and worked
closely with the GOP and USG on counternarcotics efforts over
the past year. Pakistan is a party to the 1988 UN Drug
Convention.
For Full report, click here
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2)
Pakistan is a source, transit, and destination country for men,
women, and children subjected to forced labor and sex trafficking.
The country’s largest human trafficking problem is bonded labor,
concentrated in the Sindh and Punjab provinces in agriculture
and brick making, and to a lesser extent in the mining, carpet-
making, glass bangle, and fishing industries. Bonded labor also
exists in the fisheries, mining, and agricultural sectors of
Balochistan. Estimates of bonded labor victims, including men,
women, and children, vary widely. The Asian Development Bank
estimates that 1.8 million people – one percent of the population –
are bonded laborers. In extreme scenarios, when bonded laborers
attempt to seek legal redress, landowners have kidnapped them
and their family members. Boys and girls are also bought, sold,
rented, or kidnapped to work in organized, forced begging rings,
domestic servitude, and prostitution. Recent press stories
reported on the violence in child domestic servitude, including
sexual abuse, torture, and death. Illegal labor agents charge high
fees to parents with false promises of decent work for their
children, who are later exploited and subject to forced labor in
domestic servitude, unskilled labor, small shops, and other
sectors. Disabled children and adults are forced to beg in Iran.
Girls and women also are sold into forced marriages; in some
cases their new “husbands” move them across Pakistani borders
and force them into prostitution. NGOs and police reported
markets in Pakistan where girls and women are bought and sold
for sex and labor. Non-state militant groups kidnap children or
coerce parents with fraudulent promises into giving away children
as young as 12 to spy, fight, or die as suicide bombers in
Pakistan and Afghanistan. The militants often sexually and
physically abuse the children and use psychological coercion to
convince the children that the acts they commit are justified. News
organizations, NGOs, and international organizations reported
that the 2010 floods contributed to increased trafficking in
Pakistan.
Many Pakistani women and men migrate voluntarily to the Gulf
States, Iran, Turkey, South Africa, Uganda, Greece, and other
European countries for low-skilled employment such as domestic
work, driving, or construction work; once abroad, some become
victims of labor trafficking. False job offers and high fees charged
by illegal labor agents or sub-agents of licensed Pakistani
overseas employment promoters increase Pakistani laborers’
vulnerabilities and some laborers abroad find themselves in
involuntary servitude or debt bondage. Employers abroad use
practices including restrictions on movement, nonpayment of
wages, threats, and physical or sexual abuse. Moreover,
traffickers use violence, psychological coercion, and isolation,
often seizing travel and identification documents as a means to
coerce Pakistani women and girls into prostitution in the Middle
East. There are reports of child sex trafficking between Iran and
Pakistan. Pakistan is a destination for men, women, and children
from Afghanistan, Iran, and, to a lesser extent, Bangladesh, who
are subjected to forced labor and prostitution. Many traffickers
who force Pakistanis into prostitution or labor abroad know their
victims personally.
The Government of Pakistan does not fully comply with the
minimum standards for the elimination of human trafficking, but is
making significant efforts to do so, despite the severe floods the
country experienced in 2010. The government continued its
programs to prevent and combat bonded labor, but did not
criminally convict any bonded labor offenders or officials who
facilitated trafficking in persons. The government continued to
lack adequate procedures to identify trafficking victims among
vulnerable populations and adequate protection for these victims.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2010
Overview: In 2010, Pakistan continued to experience high levels
of terrorism and Pakistan-based terrorist organizations continued
to threaten internal, regional, and global security. Violence
resulted from both political and sectarian conflicts throughout the
country, with terrorist incidents occurring in every province. While
government authorities arrested many alleged perpetrators of
terrorist violence, few convictions resulted. The Pakistani military
continued to conduct operations in areas with known terrorist
activity but was unable to expand its operations to all areas of
concern. Increased sectarian violence between the Sunni and
Shia communities and against religious minority communities also
resulted in numerous attacks with high casualties. These attacks
continued the trend of employing suicide bombers and remotely
detonated explosives to perpetrate violence. Attacks using similar
methods were also carried out against government and police
facilities.
Pakistan, particularly the Federally Administered Tribal Areas
region and the Khyber Pakhtunkhwa province, continued to be
used as a base for terrorist organizations operating in Pakistan
and Afghanistan, and Pakistani security forces undertook
substantial efforts to counter these threats. These organizations
recruited, trained, and conducted fundraising for terrorist
operations in Pakistan, and used Pakistan as a transit point for
cross border movement to Afghanistan and abroad. Pakistan's
Frontier Corps and military initiated large-scale counterinsurgency
operations in Mohmand, Khyber Pakhtunkhwa, and Orakzai, and
added one battalion in Khyber Pakhtunkhwa. Pakistan's ability to
continue robust operations was negatively impacted by the need
to divert resources to provide relief from the 2010 floods, which
caused severe, long-term damage in Pakistan. The ability to
establish and maintain security in densely populated urban areas
or areas with a historically poor security presence also remained
a major challenge for Pakistan.
When Pakistan conducted operations to eliminate safe havens in
the country, it often lacked the capability to ensure these areas
remained under the control of Pakistan's security agencies. Given
its inability to pursue the complete elimination of the terrorist
presence and fully eliminate terrorist safe havens, Pakistan
utilized a strategy to conduct limited operations to "contain"
terrorist operatives in known areas of activity. Pakistan's civilian
government and military departments cooperated and
collaborated with U.S. efforts to identify and counter terrorist
activity in Pakistan, and the United States continued to engage
Pakistan to ensure it had the will and capacity to confront all
extremist elements within its borders.
2010 Terrorist Incidents: The coordination, sophistication, and
frequency of suicide and other bombings continued unabated in
2010. Pakistan experienced hundreds of bomb blasts, suicide
attacks, and sectarian violence, resulting in more than 2,000 dead
and scores more injured. Known terrorist organizations such as
Tehrik-e-Taliban (the "Pakistani" Taliban) and Lashkar-e-Jhangvi
claimed responsibility for a number of attacks. The Afghan
Taliban, Lashkar-e-Tayyiba and al-Qa’ida also have a significant
presence in Pakistan and maintained the capability to plan,
influence, and assist violent extremist organizations within
Pakistan and regionally. 2010 Terrorist Incidents carried out
against civil society, religious groups, and government and police
officials and offices during 2010 included:
* On February 3, 10 persons were killed and 70 injured when a
suicide bomber attacked a Pakistani Frontier Corps convoy en
route to an inauguration ceremony for a new school for girls in
Maidan in Khyber Pakhtunkhwa.
* On April 28, four policemen were killed and 13 others, including
eight policemen, were injured in a suicide car bomb blast in
Peshawar at the U.S. Consulate.
* On May 28, over 80 persons were killed and more than 120
injured in Lahore in two separate but simultaneous suicide attacks
utilizing assault rifles and grenade attacks. The attacks targeted
places of worship of the Ahmadiyya Muslim community.
* On October 2, Dr. Mohammad Farooq Khan, a psychiatrist,
religious scholar, and vice-chancellor of Swat Islamic University,
was gunned down in his clinic. Farooq was strongly anti-Taliban
and frequently took part in television talk shows during which he
criticized militants and described suicide attacks as “un-Islamic”.
The Pakistani Taliban claimed responsibility.
* On December 7, the Chief Minister of Balochistan escaped a
suicide attack that injured 10 people but left the Minister
unharmed. Three organizations, the Pakistani Taliban, the Baloch
Liberation United Front, and Lashkar-e-Jhangvi Alami (Lashkar-e-
Jhangvi International), claimed responsibility for the attack.
Legislation and Law Enforcement: While Pakistan's law
enforcement community continued to pledge to prosecute those
responsible for terrorist acts inside Pakistan, a 2010 review by the
United States of Pakistan's Anti-Terrorism Court rulings revealed
that Pakistan remained plagued an acquittal rate of approximately
75 percent. The review, in conjunction with information provided
by Pakistani law enforcement partners, painted a picture of a legal
system almost incapable of prosecuting suspected terrorists. The
review determined that the accused in numerous high-profile
terrorism incidents involving U.S. victims had all been acquitted by
the Pakistani legal system.
The Anti-Terrorism Bill 2010, proposed on July 28, 2010,
remained before Pakistan's parliament. It proposes 25
amendments to Pakistan's original anti-terrorism legislation, the
Anti-Terrorism Act of 1997, including provisions that broaden the
definition of terrorism, expand the authority of law enforcement
agencies investigating terrorist incidents, authorize detention of
subjects for 90 days before presenting them before a court, and
allow increased electronic surveillance and wiretapping.
The U.S. Department of Justice continued to offer assistance to
the Government of Pakistan to improve its existing
counterterrorism laws. Under the U.S.-Pakistan Strategic
Dialogue, Secretary of State Clinton and Pakistan's Foreign
Minister Qureshi launched the Law Enforcement and
Counterterrorism working group as a platform to discuss ways to
increase cooperation. The U.S. Embassy in Islamabad has also
implemented a diverse law enforcement training program for
federal, provincial, and local law enforcement that included
training in crime scene investigation, post blast investigations, and
training specifically for counterterrorism personnel and bomb
disposal units.
U.S. officials continued to monitor court proceedings involving
high-profile terrorist attacks, such as the cases involving seven
Pakistanis currently on trial for the 2008 Mumbai attack that killed
166 people, including six Americans; and the three Pakistanis on
trial for assisting Faisal Shahzad with the attempted May 1, 2010
bombing of Times Square. The Federal Bureau of Investigation
has assisted with the respective prosecutions.
Pakistan continued to process travelers on entry and departure at
13 international airports, five land border sites, four seaports, and
two train stations with the Personal Identification Secure
Comparison and Evaluation System (PISCES).
Countering Terrorist Finance: Pakistan strengthened its
counterterrorist finance regime and committed to making
additional improvements. Pakistan's terrorist financing law is
ambiguous on key points, however, and the country’s
implementation of UNSCR 1267 was incomplete.
The informal financial sector continued to play a significant role in
Pakistan's legal and illicit economies, but the government has
taken substantial steps to curb the role of informal financial
service providers in servicing remittances. Through the Pakistan
Remittance Initiative, the government has steadily increased the
volume of remittances coming through authorized channels during
the past three years, improved Pakistan's balance of payments,
and enhanced financial transparency. The government has also
prosecuted unregistered, illegal money remitters. During the past
year, Pakistan took a substantial step toward strengthening its
anti-money laundering/countering terrorist finance (AML/CTF)
regime. In March, the parliament passed the Anti-Money
Laundering Act, which replaced a temporary ordinance and
solidified the Financial Monitoring Unit's standing as a national
center for the collection and dissemination of suspicious
transaction reports related to money laundering and terrorist
financing. Pakistan also strengthened financial regulations, in
particular the requirements to conduct due diligence and maintain
internal controls.
As an active participant in the Asia/Pacific Group on Money
Laundering, Pakistan has been under review by the Financial
Action Task Force (FATF) because of deficiencies in its AML/CTF
regime. In June, the Finance Minister committed Pakistan to an
FATF action plan, which outlined a series of steps the government
will take to remedy these deficiencies.
Despite progress, deficiencies in Pakistan's AML/CTF regime
remained. Notably, the criminalization of the financing of terrorist
acts committed against foreign governments and international
organizations was ambiguous, as was the criminalization of
financing groups that have not been explicitly banned by the
government or designated by the UN. Although Pakistan did not
make substantial progress toward removing the ambiguity in the
law this year, the Government of Pakistan committed to doing so
in its FATF action plan.
Another significant concern was Pakistan's weak implementation
of UNSCR 1267. UN-designated terrorist organizations were able
to skirt sanctions simply by reconstituting themselves under
different names. They made little effort to hide their connections
to the old groups and gained access to the financial system using
new names.
Regional and International Cooperation: Pakistan continued to
cooperate in regional and international counterterrorism forums.
However, India-Pakistan counterterrorism cooperation was lacking
in 2010.
Significant cooperation was documented during the latter part of
2010 in support for Project Global Shield, a World Customs
Organization (WCO) Counter Improvised Explosive Device (IED)
Project seeking to identify the global movement of precursor
chemicals (some dual use) that are used in the manufacture of
IEDs. A multi-country conference held at the WCO Headquarters
in Brussels in October, launched this project, which commenced
on November 1.
As a follow up to the launch of Project Global Shield, the Pakistan
Federal Board of Revenue (Customs) and UN Office of Drugs and
Crime organized a training conference in Karachi, Pakistan in
December, which provided training to customs officers and anti-
narcotics officers in the identification and safe handling of
precursor chemicals as well as training in the targeting of
container shipments that might have inappropriately declared
their contents.
In January, the foreign ministers of Pakistan, Afghanistan, and
Iran agreed on a roadmap to confront jointly the challenges of
violent extremism and terrorism facing the region by signing the
Islamabad Declaration, which was described as a guide to
stability, security, and development in the region through mutual
cooperation. Pakistani Foreign Minister Qureshi said the three
sides agreed to confront the common challenges of illicit weapons
and drug money through a comprehensive approach. The three
nations also agreed to look into the possibilities of developing
regional approaches to these challenges.
Countering Radicalization and Violent Extremism: The
Government of Pakistan has realized that counter-radicalization
through non-military means is a critical component to long-term
success against violent extremism, and has initiated certain
counter-radicalization efforts in 2010. As part of these efforts, the
Ministry of Culture announced plans to set up a TV channel
focusing on culture and traditions of the country with the objective
of countering violent extremism. The channel reportedly will cover
various aspects of Pakistani culture and traditions including folk
music, the theatre industry, regional dialects and traditions,
archaeological sites, and the history of the region and other
areas, according to the Federal Ministry of Culture.
A school in Malakand, run by the Pakistani army, continued to
rehabilitate Taliban-influenced youth. The UN Children's Fund-
funded school, originally opened in September 2009, provided
free religious education and psychiatric counseling to 85 students
from Swat, a district heavily influenced by terrorist groups. The
students were 13 to 18 years old and few had finished secondary
school. The project is the first of its kind in Pakistan.
On July 28, President Asif Ali Zardari called approximately 30
Islamic scholars and representatives of minority communities to
his official residence to discuss minority rights and interfaith
harmony in the country. The Ministry of Minorities Affairs
established interfaith committees at the district level to meet
monthly to address issues of religious tolerance and interfaith
dialogue.
____________________________________________________
Links:
Worldwide AML Legislation (International Bar Association)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| Further Tables |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
*Please note that FATF deems that a country has significant aml deficiencies if
any of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated
either Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
any of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated
either Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
| PAKISTAN |
| KnowYourCountry |
|
|
| Last Updated: 16 April 2012 |