Money laundering to be made non-bailable offence

Updated January 23, 2019


The punishment for those involved in the illegal transfer of funds is being enhanced under the new money bill to three to 10 years. — File photo
The punishment for those involved in the illegal transfer of funds is being enhanced under the new money bill to three to 10 years. — File photo

ISLAMABAD: The government is set to introduce on Wednesday (today) key amendments to the Anti-Money Laundering (AML) Act 2010 and the Federal Investigation Act (FIA) 1974 as part of the Finance Supplementary (Second Amendment) Bill 2019 to comply with the requirements of the Financial Action Task Force (FATF).

According to Dawn sources, Finance Minister Asad Umar will brief the federal cabinet on the supplementary finance bill, explaining the reasons and targets of reform packages for various sectors of the economy including small and medium enterprises, agriculture, industry, housing, stock market and exports.

Take a look: Pakistan deserves international support, not a place on the FATF grey-list

The sources added that various changes to laws and regulations had been under discussion for months to address shortcomings related to terror financing and money laundering, but did not materialise for various reasons. Now the government has found an easier legal course in the form of a money bill 2018-19.

Many laws being amended through finance bill to meet FATF requirements

Most of the changes would be made in the FIA of 1974, AML Act 2010, and the related tax laws to facilitate inter-agency coordination and investigations. The amendments, which had been finalised by a committee led by the finance minister, refer to all related agencies working on matters relating to FATF that put Pakistan on the grey list last year for not ‘doing enough’ to meet UN resolutions against organisations purportedly involved in terror financing and money laundering.

These sources said that money laundering would be defined as an offence for which bail would not be available, and a crime punishable under various clauses of a series of laws. The punishment for those involved in the illegal transfer of funds is being enhanced under the new money bill to three to 10 years, from the existing maximum imprisonment clause of a two-year term.

The fine, an official explained, was also being increased from Rs5 million to Rs50m for a director of an exchange company found involved in money laundering, hundi or hawala business. Likewise, the properties of such persons would also be attached as case property for six months instead of the 90 days under the existing laws.

Further, a new section in the proposed money bill would also extend the jurisdiction of FIA to the whole of Pakistan, including new tribal districts recently merged with Khyber Pakhtunkhwa, in accordance with the provisions of Article 247 of the Constitution. Some changes are to be made to the Foreign Exchange Regulation Action of 1947 to improve the powers of the State Bank of Pakistan and limit the transportation of foreign exchange and local currency within and outside the country.

Under another proposed section, various tribunals dealing with money laundering, tax laws and hundi and hawala, etc, will be required to complete their business in six months’ proceedings in cases referring to illegal financial transactions, including the sale, purchase and transmission of money and other instruments, including minerals. The FIA will be given permission to seek information regarding financial transactions from banks under a well-defined mechanism that does not allow low-grade FIA staff to misuse power or information.

At a review meeting in Sydney, Australia, earlier this month, FATF had generally shown satisfaction over Islamabad’s efforts and its roadmap against money laundering and terror financing. Pakistan had assured FATF of compliance with steps planned in the next review, scheduled in Paris on February 17-18. Another onsite inspection of Pakistan’s performance will be due in May.

During the May and September meetings later this year, regulators and law enforcement agencies will be expected to demonstrate results in the form of investigation, prosecutions, convictions, supervisory actions, sanctions with resulting impacts on compliance by financial institutions, implementing cross-border currency and border controls, and the enforcement of a regulatory regime at the borders.

In June last year, Pakistan made a high-level political commitment to work with FATF to strengthen its anti-money laundering regime and to address its strategic counterterrorism financing-related deficiencies by implementing a 10-point action plan. The successful implementation of the action plan and its physical verification will lead FATF to remove Pakistan from its grey list or else move into the black list by September 2019. In August last year, Pakistan was found deficient on anti-money laundering/counterterror financing laws and mechanisms.

The authorities are required to upgrade agencies and their human resources to be able to handle foreign requests to block terror financing and freeze illegal and targeted assets. By the end of September next year, Pakistan has to comply with the action plan it committed to with FATF in June.

Published in Dawn, January 23rd, 2019