ISLAMABAD, Sept 12: A financial crimes wing may be established in the Securities and Exchange Commission of Pakistan (SECP) by the end of 2003 to prevent and speedily deal with all such crimes, SECP Chairman Dr Tariq Hassan disclosed here on Friday.

Talking to newsmen he said with the spate of fraudulent finance companies serving as the backdrop to the scheme, the new SECP chief the proposed wing would serve as a financial intelligence gathering outfit to closely monitor the market for any clues to financial crimes instead of merely depending on reports received in the office.

The wing would be manned by energetic youngmen with the proper qualifications and probity to detect and respond promptly to such crimes.

The commission already had a vigilance cell but it was not proactive, he remarked.

In this connection, he said the SECP and the State Bank had jointly completed action against 60 illegal companies/brokerage houses. These included 36 companies handled by the SECP.

Besides getting placed their directors on ECL and freezing of assets, the commission had also secured orders from the courts for payment to depositors their dues by crossed cheque instead of making them wait indefinitely for the decision of cases.

Asked about the amount of money the people had been swindled of by these illegal entities, he said neither these companies were willing to provide any information nor had their clients been forthcoming in divulging the amounts deposited by them.

“We have full backing of the government and politicians and we will pursue these cases without fear or favour,” he told a questioner, who had asked whether any political pressure had been encountered in tackling with these cases.

Replying to a question, Dr Hassan said the SECP had established anti-money laundering unit. It would, however, be operational as soon as the government provides the legal framework. A law is expected to be legislated soon in this regard.

About the insurance industry, which too is regulated by the SECP, its Chairman said health insurance was a crying need and “we need to start now, otherwise it may become prohibitively expensive before long.”

He, however, regretted that both banking and insurance were conservative in their approach and had not tried to optimise their potential.

Reminded of the SECP’s resolve to do away with ‘badla’ system from the stock market, Dr Hassan said its replacement was not an issue and that the alternate instruments had been discussed with the State Bank. The modalities of doing so, however, needed to be further discussed with the stakeholders, he added.

He gave an overview of the reforms carried out by the SECP in order to fulfil the mandate given to it by the government.

One of the primary objectives of SECP was to ensure healthy growth of the corporate sector enjoying confidence of investors and creditors, thereby promoting investment and development of overall economy.

Apart from an array of legal and administrative measures taken by it to develop the capital market, the commission had arranged the exorbitant and high rates of stamp duty to be reduced in Punjab, Sindh and Balochistan. In the former two provinces, these reduced from Rs10,000 to just Rs2,000. Besides, the rates of fees were also reduced considerably. These high fees and stamp duties, he explained, were major impediments to incorporation of companies and documentation of the economy.

Consequently, as many as 1,553 companies were incorporated in 2002-03, compared to 1,184 in 2001-02 and 1,167 in 2000-01. One of the major factors in this was also the improvement in the functioning of Company Registration Offices (CROs), Dr Hassan pointed out.

New companies are now registered within two days and other services like registration of mortgages, inspection of files and supply of certified copies are provided the same day. In addition, names of new companies are not only available on the same day but also on the SECP’s website.