Islamabad:
The identification of politically exposed people remained unequal and there were not enough red corruption flashes that could detect the misuse of public office in Pakistan, according to the initial findings through an evaluation mission of diagnosis of corruption of the International Monetary Fund (IMF).
The IMF has shared the draft observations together with recommendations with the Government, giving Islamabad the opportunity to review them before the Governance and Corruption Diagnostic Evaluation Report is published at the end of this month, sources told Express PAkGazette.
“The effectiveness of the identification of politically exposed people remains unequal in all sectors due to limited access to comprehensive data, absence of automated detection tools in smaller institutions and a lack of specific red flag indicators of corruption that would help detect the misuse of public office, declared the draft of the report.
The lender has recommended issuing new guidelines in learning from global best practices to identify the misuse of the public office and verify any corruption in government contracts. Pakistan committed to the IMF in September of last year that would completely publish the report once it is completed.
According to the $ 7 billion agreement, the IMF had sent the Mission of Diagnostic Evaluation of Governance and Corruption to Pakistan this year, which met with approximately three dozen government and state institutions.
At the request of Pakistan, the IMF had extended the deadline to publish the report from July to the end of August of this year.
Politically exposed people include the head of the State, the head of the Government, the politicians, the bureaucrats, the Judiciary, the military officers and the senior executives of the state companies, the ambassadors and the members of the Parliament. There are special checks for the opening and bank account operations of politically exposed.
While the report has identified some important gaps, it has also recognized the efforts that the Pakistani authorities made to establish a basic structure to minimize the possibilities of corruption and the misuse of public office by politically exposed persons.
The draft of the report establishes that the identification of the politically exposed is guided by the regulatory requirements issued by the State Bank of Pakistan (SBP), the Pakistan Stock Exchange and Securities Commission (SECP) and the Federal Income Board (FBR) for their respective supervised entities.
He added that financial institutions and non -financial companies and people (DNFBP) must apply improved diligence measures before dealing with politically exposed persons. Improved scrutiny measures include obtaining senior management, establishing the source of wealth and continuous monitoring.
But the smallest institutions do not effectively apply these safeguards, they observed the special mission in their draft. The draft declared that institutions are largely responsible for developing their own internal systems to identify and manage risks beyond the official lists given by regulators.
The draft of the report also declared that the regulators reports often lacked clarity on typologies and specific risk indicators of corruption. The sources said that the IMF was of the opinion that, despite the patterns of deceptive transaction report and the red flag indicators for several sectors and typologies, report institutions have limited access to typologies that reflect common methods to wash corruption income.
As part of the safeguards, the FBR had also established an online platform through which financial institutions can evaluate customers against official lists of federal public officials, including major officials that serve in grade 17 to 22 and members of Parliament.
The sources said that the IMF has referred to some of the best international practices adopted by countries such as Canada and Colombia, which helped mitigate corruption possibilities through a better case detection.
Canada has published red flag indicators for transactions that involve government contracts, municipal acquisitions and behavior related to people with politically exposed, the use of corporate entities or consultants in public sector schemes and layers in layers, turnover of rapid contract and accumulation of unjustified wealth in low -salary public roles.
Similarly, the Colombian Financial Intelligence Unit developed sectoral indicators aimed at the acquisition of medical care during the Covid pandemic, the Washing together with SOE through construction companies and extractive industries, and payments routed through regional entities to avoid detection.
The sources said that Pakistan could benefit from issuing specific guidance to identify unusual financial behavior linked to state people and politically exposure contracts.
The spokesman of the Ministry of Finance did not answer the questions about whether the consultations on the IMF findings have been completed and the report would be published at the end of this month.
The sources said the Ministry of Finance had given last Friday a deadline to the various departments to respond to the IMF’s observations and recommendations. Some of the entities have accepted some observations, while others have sought reviews in disagreement with the FMI findings.
The sources said that due to the cumbersome process involved in the realization of all recommendations, there is the possibility that the government takes more time than required to publish the document.
