SBP to get powers to check accounts for terror funding
By Mubarak Zeb Khan
ISLAMABAD, June 10: The government has proposed to empower the State Bank of Pakistan (SBP) to get information relating to any business transaction from banking companies and financial institutions in order to identify offences of money laundering or funding of terrorism.
Interestingly, any loss incurred by an individual or company due to disclosure of such information would not be compensated for by the central bank and no lawsuit or court proceedings may be instituted for an injury or loss.
Through the Finance Bill 2007, it has been proposed that no bank or financial institution shall take any action of whatever nature against an employee of a bank or financial institution for disclosing any information to the SBP.
Provided that where the SBP, after examination, concludes that a transaction reported to the central bank was conveyed with a mala fide intention, it shall take action against the bank and employee concerned for misreporting.
Under the amendments proposed in the Banking Companies Ordinance, 1962, banking companies and financial institutions would disclose information on a confidential basis to the SBP about their respective clients according to the needs of the central bank.
If the SBP has reasonable grounds to suspect that a person or company or corporation is involved in money laundering or funding of terrorism or terrorists, it may send such information to the law-enforcement agency having jurisdiction in the matter.
It shall not be unlawful for a person or the SBP or a banking company or an employee thereof to make a disclosure in good faith in compliance with the provisions of this section.
Pending investigations, the SBP may pass an order for freezing the accounts of such a person or company or corporation, provided that the investigation shall be completed by the central bank within 180 days. The law further says the aggrieved party may make a representation to the SBP. The central bank shall decide such representation within 30 days and the aggrieved party may go for an appeal in a High Court.
If incriminating evidence is not found during the investigation, the SBP shall withdraw its order. The court or the authority, to which the case is referred after completion of the investigation, may confirm, modify, rescind or alter the order passed by the central bank.
Any person who discloses information of investigation to another person which could affect the whole process on conviction by court of sessions will be punishable with imprisonment of either description, which may extend to five years or with fine which may extend to one hundred thousand rupees or with both. The offence will be non-bailable and non-compoundable.
The law also defines money laundering which includes engaging in any manner, whether directly or indirectly, in a transaction that involves property which is the proceed of a crime, or transferring proceeds of crime through legitimate means in order to conceal or make untraceable their original source.
