::Anti-money laundering laws and Pakistan
Money laundering is a global menace sans boundaries, faith or ideological frontiers. Technological advancements and economic interests have reduced this world into a global village thereby providing massive opportunities for criminals to manipulate otherwise eroding jurisdictional barriers in their favour with relative ease. By carefully using legal money transmission channels the proceeds of a crime perpetrated in a remote area in South America may easily land up unnoticed in Dubai en-route to Europe. The frequency and relative ease in laundering money shook the global conscience. As events unfolded it became apparent to the world that money laundering was directly connected with terrorist financing. This deadly combination posed a grave and imminent danger to world economy, stability and above all world security. This imminent global danger demanded a swift global response.
The United Nations as flag bearer of the comity of nations took upon itself to introduce and enforce various legal instruments to fight corruption in any form. Money laundering and terrorist financing captured the concern of the United Nations. An appropriate and strong message was sent out by the United Nations and an evolving strategy was formulated.
Even before 9/11, the United Nations had embodied the money laundering aspect in its 1988 United Nations convention against the Illicit Traffic in Narcotics Drugs and Psychotropic Substances, the United Nations Convention against Transnational Organized Crime and United Nations Convention against Corruption and the International Convention for the Suppression of the Financing of Terrorism.
After 9/11, enough evidence was available that established the links between terrorism, transnational organized crime, the international drug trade and money laundering. In September 2001, the United Nations Security Council unanimously adopted wide-ranging anti-terrorism Resolution No 1373. This resolution in essence is the backbone of international response to counter terrorism and terrorist financing. Another important international development in combating money laundering was the establishment of Financial Action Task Force (FATF) in the year 1989. This is an inter-governmental policy making body, comprised of over 30 countries, that has a ministerial mandate to establish international standards for combating money laundering and terrorist financing.
The primary functions of FATF are: It sets international standards to combat money laundering and terrorist financing; assessing and monitoring compliance with the FATF standards; conducting typologies studies of money laundering and terrorist financing methods, trends and techniques; responding to new and emerging threats, such as proliferation financing.
Initially FATF had given 40 recommendations to counter money laundering. After 9/11, FATF gave another 9 recommendation to counter terrorist financing. Collectively these recommendations prescribed the measures to be adopted by the member states and other jurisdiction to counter money laundering and terrorist financing. Some of these key measures include: Introduction of legal and regulatory regimes to check money laundering; following Customer Due Diligence (CDC) /Know Your Customer (KYC); proper record keeping; reporting of suspicious transactions; establishment of competent authorities, their powers and resources; freezing of funds and confiscation of terrorist assets; and establishment of asset forfeiture fund.
Over 180 jurisdictions including Pakistan have joined FATF or an FATF style regional body to implement the FATF standards and having their anti-money laundering/counter terrorist financing (CFT) systems assessed. Some of these regional bodies are: Asia Pacific Group on Money Laundering (Pakistan is a member of this group); Caribbean Financial Action Task Force; Eurasian Group; Eastern and Southern Africa Anti Money Laundering Group; The Council of Europe Committee of Experts on the Evaluation of Anti Money Laundering Measures and the Financing of Terrorism; The Financial Action Task Force on Money Laundering in South America; Inter-Governmental Action Group against money laundering in West Africa; Middle East and North Africa Financial Action task Force.
Anti-Money Laundering Act, 2010 is one of the measures taken by the government of Pakistan to fulfill its international obligations. This law has provided the basic legal framework to counter money laundering and terrorist financing. The legal structure is similar to the one prevailing in different countries. A powerful Financial Monitoring Unit (FMU) has been established under section 6 of the Act. National Executive Committee to combat money laundering has been established under section 5 of the Act. This is a high powered body that comprises of four federal ministers, Governor State Bank of Pakistan, Chairman Securities and Exchange Commission of Pakistan and Chairman National Accountability Bureau.
The role of this committee is to develop a national strategy to fight money laundering, determine offences that may be considered as predicate offences, making recommendations to the federal government for effective implementation of the Act, issue directions to the agencies involved in the implementation and administration of the Act and take measures for development of investigating agencies.
Offences under the Act have been made non-bailable and non-cognizable. Provisions have been made in sections 26 and 29 of the Act for seeking mutual assistance of other states as well as for reciprocal arrangements for processes and assistance for transfer of accused persons. Mandatory disclosure requirements have been placed on the directors, officers, employees and agents of reporting entities, financial institutions and non-financial business or profession.
The writer is a lawyer based in Islamabad. He can be contacted at email@example.com