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Pak left loopholes in accounts for terror financing to dodge FATF scrutiny

 Pakistan has deliberately left loopholes in small savings accounts to help financing terrorist groups, many of whom enjoy the patronage of the state

Mauritius joins Pakistan on FATF's 'grey list'; questions over FPI inflows

Pakistan has deliberately left loopholes in small savings accounts to help financing terrorist groups, many of whom enjoy the patronage of the state to dodge the Financial Action Task Force (FATF) scrutiny. The FATF has been asking Pakistan to comply with international standards and rules of anti-money laundering and anti-terrorist financing laws and regulations.

Fabien Baussart, writing in a blog post of The Times of Israel said that although Pakistan has complied with some of the conditions set by FATF, with great reluctance, there is one area which has not paid due care to plug the terrorist financing – small savings accounts. Small savings in Pakistan generate over Rs 4 trillion in over seven million accounts held by individuals, equal to 28 per cent of all bank deposits.

The possibility of terrorist groups and individuals holding these accounts remains quite high, given the number of terror groups and cadres in Pakistan. By Prime Minister Imran Khan‘s own admission, a couple of years ago Pakistan was home to over 40,000 terrorists, said Baussart. These shortcoming were flagged by FATF in its two recent compliance reports – in October 2019 and September 2020. The October 2019 report clearly stated that a large section of the banking sector, both formal and informal, was either out of the ambit of any anti-money laundering law or did not cater to any existing regulations of identifying suspicious accounts and transactions.


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