NIOC Policy Brief on Terror Financing: A Professional Response.

Shahzada Sultan

I have gone through the brief. It is an excellent write-up, the best paper contributed by any independent think-tank in Pakistan to date. I must congratulate the whole team for this contribution. The picture has been very credibly captured, and the findings and recommendations are very relevant and valid. I have attempted to reply to the following questions you put me. With humble regards. Shahzada Sultan

Q1. How can the government overcome political and procedural differences between the federal and provincial administrations to deliver the necessary comprehensive response to TF?

The crime of TF is primarily the mandate of Provincial CTDs because the criminalizing sections are embedded in the ATA 1997. Other agencies such as FIA (in money laundering and cyber-crime), Customs (in cash smuggling), and ANF (in narcotics smuggling) may find an element of TF. If they do, the case is referred to the relevant CTD that has jurisdiction over the place of occurrence. Political differences are not an impediment as such. The main impediment is the investigative and prosecutorial capacity, and the standards of proof during a trial. Our courts are so used to witness-centric evidence, that the judges lack the training and intellectual refinement to grasp the intricacies of white-collar crime or the crime of TF. As for the procedural differences, the procedure is same everywhere; we also have a national policy on financial investigations, cooperation between the investigators and prosecutors is also improving, but the investigators and prosecutors still find it difficult to have unhindered access to bank records and transactions. The situation has improved a lot courtesy FMU serving as a link between the CTDs, the SBP and financial institutions. But, this arrangement being new will take long habit before it is deep-rooted and widely accepted.

Q2. Can you describe where COVID has the greatest impact on Pakistan’s ability to meet the FATF requirements? And what additional efforts or measures do you believe the government needs to deliver to mitigate this impact?

Although no specific impact assessment has been carried out in this regard yet FATF President in his April 2020 Statement and subsequent COVID-19 related ‘ML/TF Risks and Policy Document’ issued in May, 2020 raised concerns that the unprecedented situation of COVID-19 may have considerable impact on the organized crime and terrorism landscape by exploiting existing and emerging vulnerabilities, especially when LEAs are engaged in COVID-19 related new responsibilities. In view of the distractions caused by the pandemic in the routine functions of LEAs, regulators, supervisors and agencies responsible for ensuring robust implementation of AML/CFT laws, criminals and terrorists may reinvigorate their activities both at individual and organized level.

Secondly, FATF, due to the ongoing COVID-19 pandemic, decided on 28 April 2020 on a general pause for four months in the review process for a number of countries under ICRG (International Cooperation Review Group) assessment including Pakistan. In the recently concluded virtual FATF plenary session on June 30, 2020, FATF extended its Public Statement on monitored jurisdictions that was previously issued in February 2020 ( The COVID-19 pandemic has affected all countries including Pakistan. There was some impact on allocation of resources and its utilization by implementing agencies including supervisors, LEAs, prosecutorial authorities due to lockdowns, social distancing measures and other COVID-19 related responsibilities undertaken by the authorities. However, with the purpose to meet commitments under the FATF Action Plan, the authorities have made significant and marathon use of technology platforms (like Zoom app) to overcome the constraints. Subsequent to initial period of strict lockdowns, implementing agencies carried on with their field/ enforcement activities to achieve desired progress on the remaining actions.

Most importantly, NACTA has taken steps to mitigate ML/TF Risks in COVID-19 Scenario: NACTA in collaboration with other stakeholders has issued a TF risk Directive to all authorities highlighting ML/TF risks in COVID-19 situation and necessary mitigation by the concerned agencies.

Focus of efforts in this Pandemic situation should be on the following:

  • There should be adequate awareness and sensitization in all authorities to mitigate ML/TF risks including LEAs, relevant provincial authorities, financial regulators like SBP, SECP, FMU, etc. to make them acquaintance about the new scenario and to increase awareness down the line.
  • The LEAs should beef up their measures against misuse of pandemic situation by designated/proscribed entities or any individuals acting on their behalf and conduct a ground check in all provinces to detect any such funding.
  • LEAs should enhance checks against misuse of charities/fund raising. UN listed/ proscribed entities and associated individuals should not be allowed to take any part in social welfare services
  • Any activity related to illegal fund raising related to COVID-19 should be reported followed by law enforcement action.
  • Provincial authorities should ensure continuous & close monitoring of situation to avoid misuse of vulnerabilities.
  • Authorities should keep close watch on new typologies of misuse of COVID-19 situation for a proactive response including countering extremism agenda via social media, monitoring very closely the cyber related frauds.
  • Financial Regulators should ensure regular engagement with the private sector to prioritize & address key ML/TF risks.
  • Financial institutions should remain vigilant and report suspicious transactions to FMU under AML Act in case of any abuse of financial systems, particularly for cross-border flows in relation to COVID-19 funding.


Q3. How far is Pakistan willing to go to deliver sustainable/continuous pursuit of proscribed groups through the courts?


For past two years Pakistan has been consistently targeting the proscribed groups to combat and convict TF. The investigations, prosecutions and convictions of TF cases have all grown exponentially. The intention of the government is clear. It aims to starve these groups. Judges have been engaged and sensitized about the gravity of the crime of TF, which they earlier were not. Given the commitments we have to honour internationally, I am sure, the government will do it on a sustainable and continuous basis. The last two years’ work shows ample evidence of this.


Q4. Your assessment of NACTA’s position within the government and NACTA’s ability to deliver across the areas that NIOC PB identifies them as a responsible agency?


The Policy Brief envisages, and rightly so, a very large role for NACTA in terms of policy and strategy coordination, support and supervision as well as in initiating and leading certain elements in the CFT regime. NACTA is already performing most of these roles and is quite capable of taking up others. NACTA actually has become one of the four leads of Pakistan’s CFT regime at the Federal level (others being SBP/FMU, MoFA and Customs), and the lynchpin for TF investigations and prosecutions. It built the state capacity for TF prosecutions from the scratch, and contributed tremendously in terms of carrying out National TF risk assessment, and coordination at the national level to implement Pakistan’s FATF action plan.