In Faez Isa case, SC gives clarity on definition of ‘money laundering’

Published October 24, 2020
Justice Qazi Faez Isa. — Photo courtesy: SC website
Justice Qazi Faez Isa. — Photo courtesy: SC website

KARACHI: One unanticipated by product of the Supreme Court’s detailed judgement in the Qazi Faez Isa case is how money laundering has suddenly been cast in a clear legal light.

Paragraphs 107, 108 and 109 of the judgement dwell at length on whether or not the petitioner has committed money laundering by not disclosing the assets in question in his wealth statements.

The apex court finds that under the law in force — Anti-Money Laundering Act 2010 (AMLA) — that “a necessary element of the offence of money laundering is the commission of a predicate offence.” These predicate offenses are listed in the schedule attached to the law.

“The execution of this offence gives birth to the proceeds of crime, the movement of which attracts the criminal conduct of money laundering” the judges assert.

It follows, therefore, that “without the commission of a predicate offence there can be no offence of money laundering.” Not all statutory violations can be used to invoke the charge of money laundering, the court says. Only those offenses listed in the Schedule to the Act can.

“A perusal of the Schedule reveals that the non-declaration of assets by a taxpayer under the Ordinance is not a predicate offence under AMLA” the court says.

On this ground, the court finds that no case of money laundering can be made against the petitioner in this case, since “no predicate offence has been alleged against the petitioner”.

“In the above factual scenario, an allegation of money laundering against the petitioner is entirely fictional at this stage” the court says. Moreover, the court also says that the Schedule identifying the predicate offences was issued in 2016, that “it is an established fact that before 2016, violations of the Ordinance could not form the basis of a money laundering allegation”

The findings have ramifications beyond the case itself.

“It is a welcome development that the SC has clarified something which is internationally recognized and is also a part of AMLA, which unfortunately in the past has been misinterpreted and misrepresented by the government, at times for political motivations, by focusing only on the asset when failing to identify or provide any evidence, of the actual corrupt action, such as official acts in exchange for money or benefits, which would then be the source of the laundered assets” says Zahid Jamil, who as a former special public prosecutor for the FIA was one of the first lawyers to use and defend AMLA before the courts.

Business persons have often found themselves charged with money laundering in cases of simple undisclosed incomes or assets, says Shabbar Zaidi, former FBR chair and prominent chartered accountant.

“At the moment any discovery of an undeclared asset or income of a business is treated as money laundering by the authorities, whereas this was actually a case of undisclosed income” he says. “Now the Supreme Court has made it clear that there can be no money laundering without a predicate offence, and these predicate offences are recognised only after 2016, means the charge of money laundering will no longer be applied in cases of undisclosed incomes and assets.”

Published in Dawn, October 24th, 2020

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