November 27, 2006	Monday	Ziqa'ad 5, 1427

THE revised draft of the Anti-Money Laundering (AML) Bill is pending for approval of the National Assembly since Aug 2005 and is likely to be passed soon to tackle the problem of black money.

The country has been a lucrative market for black money like many other countries.

Money is still coming through Hawala from the Middle East though much of it has been diverted to normal banking channels after 9/11. Pakistan is still high on the corruption index of the Transparency International and tax evasion is a normal practice. Though various studies have been undertaken by economists, the estimates about the size of the black economy vary greatly, depending on the methodology used and the period covered.

Even worldwide, there are no accurate estimates available about money laundering. Some two years back, the IMF had estimated money laundering at about two to five per cent of the world's gross domestic product (GDP) - at least $600billion. The Group of Seven (G-7) nations' Financial Task Force had put the figure between $300-$500 billion.

After the 9/11 incident, the United States has been putting pressures on Pakistan to come up with laws to check money laundering and terrorist financing. For this purpose, the World Bank (WB) has provided $25million as technical assistance.

In the draft AML bill, the SECP had proposed powers for the NAB and itself to tackle money laundering. It had proposed chairmen NAB and SECP along with governor State Bank of Pakistan (SBP) and director-general of the proposed Financial Monitoring Unit (FMU) as members of the National Executive Committee.

However, the finance ministry replaced the names of the chairmen NAB and SECP with ministers of interior and law and justice while amending the draft before sending it to the federal cabinet for approval.

The SECP has now an advisory role in the implementation of the AML Act.

According to the bill, the National Economic Committee(NEC) would meet regularly to develop, coordinate and publish an annual national strategy for fighting money laundering. The Committee would make recommendations to the federal government for the effective implementation of the AML Act. Special Courts would be established for which the federal government would appoint special judges.

In the provinces, special judges would be appointed in consultation with the chief justices of the high courts. No judge would be appointed for Special Courts until he has been a judge of High Court or a Session judge qualified to be the judge of High Court. The decision of these Special Courts can be challenged in the High Court within 60 days.

The draft bill says that financial institutions are supposed to provide Suspicious Transaction Reports to the FMU that would contain information about the disguised proceeds and illegal funds of the clients.

These reports would have to be submitted within one week from the time institutions suspect such activities.

The federal government would also appoint investigation officers – a BPS-18 employee of federal or provincial government –who, if needed, would be assisted by officers of the customs and central excise departments, federal, provincial and local government authorities, banking companies or financial institutions.

But there is one simple question which needs an answer. Whether the proposed AML Act was inspired by the country’s own needs or whether it is one the tools through which the US wants to cut financing to its “terrorists”(enemies) and Jihadi organizations?

During his September 2003 visit to Pakistan, Mr Snow had raised the issue of financial sector reforms and initiatives taken by the Pakistani government on anti-money laundering and foreign exchange reforms with the Pakistani authorities including President Gen Pervez Musharraf.

But the AML laws are also in the interest of Pakistan and would help improve not only the country’s image abroad but also help integrate the national economy into the global financial market.

The time has come for the government to get the AML bill passed by the Parliament and ensure that when it becomes a law, it is effectively implemented.