FATF: Pakistan leaves loopholes in small saving schemes to help terror groups

Fabien Baussart wrote in his blog post published in the Times of Israel: "Small savings in Pakistan generate over Rs 4 trillion in over seven million accounts held by individuals, equal to 28 percent 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 40000 terrorists."

"For the last few years, the global money laundering and terrorist financing watchdog, the Financial Action Task Force (FATF), has been asking Pakistan to comply with international standards and rules of anti-money laundering and anti-terrorist financing laws and regulations.

"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," he wrote.

"The problem lies with the new rules–National Savings Schemes (AML and CFT) Rules, 2019, which calls for scrutiny of all account holders–seven million of them–in six months and risk profiling of the account holders in a similar period," the writer added.

Baussart said the All Pakistan National Savings Officers Association (APNSOA) has flagged several reasons why Pakistan was unlikely to fulfill the FATF obligations regarding the small savings sector.

"The first is the problems in identifying the consumers as a mechanism for doing so has not been put in place despite such a tight, and almost impossible, deadline. To illustrate, printed copies of KYC (Know Your Customer) were not available, till April this year, in any of the National Savings Centres," read the blog post.