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Govt rejects demand for linking CNICs with financial system

Updated November 03, 2018


Asia/Pacific Group proposes linking financial system to CNIC in order to curb money laundering and terror financing. — Photo/File
Asia/Pacific Group proposes linking financial system to CNIC in order to curb money laundering and terror financing. — Photo/File

ISLAMABAD: The government has rejected a suggestion by the Asia/Pacific Group (APG) for linking the financial and banking system with the country’s registration and database authority as part of measures aimed at curbing money laundering and terror financing.

The APG had proposed that the country’s financial and banking system be linked to the chip-based Computerised National Identity Cards issued by the National Database and Registration Authority (Nadra), on the pattern of citizens’ data of the US, according to sources.

They said the suggestion was politely declined because Nadra was just a citizenship registration authority and did not fall in the category of agencies linked to the financial system and had nothing to do with anti-money laundering (AML) and countering financing of terrorism (CFT) activities.

Leak of financial and citizens’ data is against State Bank’s regulations

The sources said any linking of the national database with financial data and a leak to a third party would lead to a breach of people’s information, which was against regulations of the State Bank of Pakistan.

An official said the APG delegation that visited Islamabad last month also wanted the launch of an elaborate mechanism to keep tabs on cash donated (in the shape of sadqa and zakat) by citizens to madressahs and the poor. Currently there’s no mechanism to monitor such financial flows.

The authorities were also told to develop a database of all international travellers at all airports through a federal agency, preferably the Federal Investigation Agency, mentioning the amount of foreign exchange carried by them.

However, according to an official, the mechanism has not been finalised yet due to differences over the manner of inter-agency coordination. Also, it has yet to be decided which agency will gather data or upload them for domestic agencies and which one will share them with international AML institutions although it is almost clear that the Financial Monitoring Unit will be the focal point for international data sharing.

The government has requested cooperation from international agencies through the APG for building capacity of experts in the area of AML and CFT activities.

At a recent meeting, Finance Minister Asad Umar ordered improved institutional coordination to ensure timely enforcement of the Financial Action Task Force (FATF) Action Plan and directed that complete responses to APG’s queries be filed in time.

He also asked all the relevant institutions to develop an effective monitoring mechanism to ensure that all stakeholders completed the assigned tasks within the agreed timeline.

The APG would send its draft report on its findings by November 19. Pakistan would be required to submit its response to the findings within 15 days of receipt of the draft, on the basis of which the group would submit its interim report to the FATF in Paris.

The APG delegation will visit Pakistan again in March-April of 2019 for another ‘onsite mutual evaluation’ whose report will be made public in July.

The authorities have been told that Pakistan will have to make robust and significant progress from now on and before the next review if it wants to move out of the FATF grey list. Otherwise its name will be included in the black list.

The sources said the APG had highlighted shortcomings on the anti-money laundering front and in areas involving control and monitoring of non-profit organisations and counter-terror financing mechanism as various institutions suffered poor interface of information sharing and action to combat the deficiencies. Even in areas where the legal framework was robust, the APG found the implementation to be weak.

The delegation was also reported to have informed the finance minister that the agencies were found to be ill-prepared or ill-informed. At times they were not willing to share information.'

Published in Dawn, November 3rd, 2018