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FATF observes Pakistan’s significant progress in 14 of 27 action points

FATF observes Pakistan’s significant progress in 14 of 27 action points

ISLAMABAD: The Financial Action Task Force (FATF) has observed substantial progress made by Pakistan in the implementation of 14 of the 27 recommendations about the country’s anti-money laundering and combating financing of terrorism (AML/CFT) mechanism.

The meetings began on Monday but the plenary session, which will decide whether to keep Pakistan on its watch list, also known as the grey list, begins on Feb 19.

Pakistan has adopted an effective strategy in the financial sector to curb terror financing and enhanced cooperation between institutions to combat transfer of funds to terrorists.

The staff of non-banking finance sector was informed about measures taken by the state concerning FATF’s action points for AML/CFT.

Moreover, the efforts of the State Bank of Pakistan (SBP) to effectively monitor financial institutions through audits and maintenance of passengers’ data at the airports have been hailed.

The global illicit financing watchdog has also been informed of Pakistan’s strategic plan to restrict smuggling of currency, jewelry and other valuables.

In the light of the FATF recommendations, the Presidential Tax Law (Second Amendment) Ordinance, 2019, was issued to prevent the smuggling of currency and other valuables, which was made applicable from Dec. 26, 2019.

Under the ordinance, strict penalties were to be imposed on smuggling of foreign currency, gold and diamonds.

The government, through a presidential ordinance introduced significant changes to tax laws to implement concessions promised to traders, reduce duty on import of low-value mobile phones, and penalise currency smugglers.

The 24-page ordinance was notified on Dec 28, but released to the media on Jan. 1. The amendments were also applied to income tax, sales tax and customs duty.

The ordinance was issued in order to enable sharing of information between the Federal Board of Revenue (FBR) and Financial Monitoring Unit (FMU) to facilitate the latter to perform its functions as laid down in the Anti-Money Laundering Act, 2010, and to ensure compliance with the FATF regulations.

As per the details issued by the FBR, necessary amendments have been made under this Ordinance in Customs Act 1969, Income Tax Ordinance 2001, Federal Excise Act 2005 and General Sales Tax Act 1990. The ordinance prohibited carrying currency more than $10,000 and has ordered confiscating the amount being carried more than that, and the imposition of penalty according to the value of the currency.

To penalise persons found illegally carrying foreign currency ranging between $10,000 and $200,000 or above, varying degrees of penalties have been proposed, from a mere fine to imprisonment of up to 14 years.

Carrying precious metals, gold more than 15 tolas, silver, diamonds and jewelry has also been prohibited, and if caught in smuggling, not only the valuable(s) will be confiscated by the authorities but fine equal to the value of the object being smuggled will be imposed.