ISLAMABAD: After a hiatus of months, the National Assembly’s Standing Committee on Finance on Tuesday unanimously cleared two revised bills seeking amendments to anti-money laundering law and foreign exchange regulations to meet requirements of the Financial Action Task Force (FATF).
In doing so, the committee led by former finance minister Asad Umar secured safeguards to the proposed amendments by requiring investigation officers to have court warrants before arresting persons suspected of committing crimes.
The two bills are aimed at strengthening the existing laws on money laundering and foreign exchange control to make them more stringent to fight money laundering, hundi and hawala and effectively regulate foreign exchange transactions to meet standards of the Paris-based global watchdog on financial crimes.
Pakistan has been on FATF’s grey list since June last year and was given about 15 months until October to comply with global standards on financial business and transactions to avoid being put on the blacklist having serious economic implications. The International Monetary Fund (IMF) has also asked Pakistan to comply with the FATF requirements, otherwise its foreign inflows could be badly affected.
Court warrants must for arrest of suspects under proposed laws
The NA committee discussed the Anti-Money Laundering (Amendment) Bill 2019 clause by clause and unanimously recommended that the subject bill may be passed by the National Assembly with a few amendments. The committee was against giving powers to investigation officers of the Federal Investigation Agency to arrest a person if they had the reason to believe the suspect was guilty of an offence punishable under the money laundering law.
Most of the committee members, particularly those belonging to the opposition parties, believed that such powers could be misused even for political purposes. The committee was finally able to link the arrest of the suspects with the issuance of arrest warrants by a court.
PML-N’s Dr Ayisha Ghaus Pasha argued that one of the key reasons for the people to avail illegal hawala and hundi transactions was the inability of regular/legal channels to deliver on their genuine requirements. She demanded that the committee be also informed about the measures taken to streamline the formal channels of remitting funds.
Some other members of the committee, while discussing the issue of foreign exchange regulations, also agreed that restrictions on legal transfer of funds were one of the key factors encouraging the illegal practice.
The deputy governor of the State Bank of Pakistan (SBP) informed the committee that an amendment had been proposed on the suggestions of the committee with regard to movement or transfer of foreign currency (inland movement), which would be maximum $10,000 or equivalent in other currencies.
After a threadbare discussion, the committee unanimously recommended that the bill be passed by the National Assembly with minor amendments proposed by the committee.
The committee asked the SBP to provide in the next meeting the 10-year history of total applications received with regard to permission to remit money along with details of how much time was consumed in dealing with such applications as well as the number of applications accepted and rejected.
The committee also directed that tribunals be given powers to decide cases with regard to confiscation of property, currency, gold, silver or goods. The committee asked the SBP governor to attend its next meeting.
The committee also approved the Anti-Money Laundering (Amendment) Bill, 2019 and proposed amendments to various sections of the law to increase punishment for money laundering up to 10 years and fine up to Rs5 million and do away with the condition of administrative process to cooperate with financial intelligence units of other countries for sharing of information relating to money laundering and promptly filing of suspicion transaction reports and others.
The committee expressed displeasure over the continuous absence of Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh from its meetings.
The committee was informed by an SBP representative that the inland movement of $10,000 and above would need the central bank’s prior approval. It was reported that money laundering was also being done through over-invoicing and under-invoicing. The SBP representative said some people remitted 40 per cent funds through banking channels and 60pc through hundi, while dollars had been smuggled out of Pakistan.
An FIA representative told the committee that anybody could transfer foreign exchange abroad and get a confirmation messages within 15 minutes. He said a Karachi-based money changer had committed Rs16bn worth of money laundering.
The committee was told that funds or property involving the use of money laundering or hundi/hawala could also be confiscated under the proposed law on the orders of special tribunals.
The committee decided that the Islamabad Capital Territory Prohibition of Interest on Private Loans Bill, 2019 would be discussed in its upcoming meeting.
The committee deferred recommendations of the Special Committee on Agricultural Products for agriculture development in the country and decided to hold an exclusive meeting on the subject. The committee also did not take up a briefing by the Competition Commission of Pakistan on sharp increase in prices of cement, flour, sugar, domestic airfare and automobiles.
Published in Dawn, July 31st, 2019