New rules in the works to meet FATF conditions

Published May 10, 2021
In this file photo, the logo of the FATF (the Financial Action Task Force) is seen after a plenary session in Paris. — Reuters/File
In this file photo, the logo of the FATF (the Financial Action Task Force) is seen after a plenary session in Paris. — Reuters/File

• Specialised agencies to probe money laundering cases
• Special prosecutors to be hired to ensure implementation

ISLAMABAD: The government is set to introduce new rules on forfeiture, management and auction of properties and assets relating to Anti-Money Laundering (AML) cases and transfer of investigations and prosecution of AML cases from police, provincial anti-corruption establishments (ACEs) and other similar agencies to specialised agencies to achieve remaining benchmarks of the Financial Action Task Force (FATF).

This is part of two sets of rules including the AML (Forfeited Properties Management) Rules 2021 and the AML (Referral) Rules 2021 under the National Policy Statement on Follow the Money approved by the federal cabinet meeting a few days ago.

These rules and related notifications for certain changes in existing schedule of Anti-Money Laundering Act 2010 (AMLA) would come into force immediately to be followed by appointment of administrators and special public prosecutors for implementation.

Based on these measures, the FATF would conclude if Pakistan has complied with three outstanding benchmarks, out of 27, that blocked its exit from the so-called grey list in February this year. Several review meetings of the FATF are scheduled to begin in the second week of June, culminating in the next FATF plenary on June 21-25.

The three outstanding action points (out of total 27) include (i) demonstrating that terrorist financing (TF) investigations and prosecutions target persons and entities acting on behalf or at the directive of the designated persons or entities; (ii) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions; and (iii) demonstrating effective implementation of targeted financial sanctions against all designated terrorists, particularly those acting for them or on their behalf.

Now, the government has decided to appoint dozens of administrators with the powers to confiscate, receive, manage, rent out, auction, transfer or dispose of or take all other measures to preserve the value of the properties and perishable or non-perishable assets (including those at godowns, maalkhanas or any other place) to be confiscated under the AML 2010 rules or court orders pursuant to proceedings under AMLA 2010.

Under the decision, regional directors of the Anti-Narcotics Force would be designated as administrators for the ANF, customs collectors for the Federal Board of Revenue, directors of directorates of intelligence and investigation of the Inland Revenue Service for the IRS, zonal directors for FIA and additional directors of recovery, disposal and assets management cells for National Accountability Bureau.

The AML (Forfeited Properties Management) Rules 2021 specify how the inventories would be measured, described or defined, protected and evaluated for auction and how to complete all processes thereto, including constitution of auction committees and how properties would be quantified or classified like if a property is of residential, commercial or industrial nature and what should be its market value or sale price etc.

For example, the movable case property worth more than Rs100,000 would be kept in the locker or vault in the State Bank of Pakistan, district or tehsil treasury or any nationalised bank. For withdrawal of such movable properties, the agency concerned would designate two officers of grade-17 or above and prior written permission of next supervisory officer of the agency would the required.

Each agency would establish a central asset recovery office to ensure assets recovery and management of the forfeited property and keep a designated central account with the SBP maintained by the ministry of finance where proceeds of property would be remitted by all agencies after attainment of the finality of forfeiture order by a court. All investigating and prosecuting agencies would exchange financial intelligence and information about the properties with other stakeholders for expeditious confiscation and forfeiture under the AMLA 2010.

Secondly, the Anti-Money Laundering (Referral) Rules, 2021 are being introduced to enable transfer of the cases from one set of investigation agencies to another. In this case, if police, the ACEs or any other governmental organisations, other than investigating and prosecution agency under the AMLA, while conducting an inquiry or an investigation of any offence, finds that an offence under the AMLA 2010 has been committed or is likely to be committed and such agency lacks jurisdiction to take cognizance of it, the head of such agency or authorised representative at any state of the investigation would refer the matter to the head of the agency concerned having jurisdiction to investigate.

Police, the ACEs or other governmental organisations would continue an inquiry or an investigation of the offence and would take necessary measures to preserve and retrieve the relevant information and evidence and case properties till formal acceptance by the investigating and prosecuting agency concerned as set out in the relevant clause of the AMLA and formal handing over and taking over of complete record.

After acceptance of the case by the competent investigating and prosecuting agency, police or ACEs etc would hand over complete record, including case files, record of proceedings and seizure memos along with relevant evidence, property and other material seized and the accused in custody, if any. Such investigating and prosecuting agencies would resume all the proceedings under the said act including to examine, re-examine persons concerned and other oral and documentary evidence and would expeditiously take steps as necessary for just finalisation of the proceedings.

Likewise, tens of special public prosecutors would be appointed for the ANF and Counter Terrorism Department (CTD) besides a separate panel of lawyers for customs and the IRS of the FBR. Also, law officers not below the rank of assistant director legal would be appointed for the for FIA and special public prosecutors for NAB.

The cabinet was explained that based on the outcomes of the mutual evaluation, Pakistan was placed by Asia Pacific Group (APG) in the (Expedited) Enhanced Follow Up process which requires the country to submit its follow up report almost every quarter to the APG to provide it with an update on the progress made. These follow up reports (FURs) provide Pakistan a chance to request an upgrade in ratings of recommendations which have been earlier rated as ‘partially compliant’ and ‘non-compliant’ and where subsequently significant progress has since been made.

So far, Pakistan has submitted three FURs in Feb and Oct 2020 and Feb 2021. Of these FURs, only one report had been adopted by the APG in which Pakistan was re-rated in Recommendation No 29 (Financial Intelligence Unit) from ‘partially compliant’ to ‘compliant’. In the remaining two FURs, Pakistan had requested for re-rating in 27 recommendations, analysis of which is being conducted by the APG and the same will be adopted within this month (May).

Pakistan also has to issue “National Policy Statement on Follow the Money (NPSFM)”. Because of this statement and rules listed above, Pakistan’s compliance with FATF recommendations in Post Observation Period Report (POPR) would further improve with corresponding enhancement in the ratings or effectiveness of the FATF’s relevant Immediate Outcomes. Pakistan’s POPR would be reviewed by the FATF’s Asia-Pacific Joint Group (A-PJG), and based on the report of this group, the FATF would decide further course of action on Pakistan’s progress on the POPR in its plenary scheduled in June 21-25, 2021.

The NPSFM commits Pakistan to tackling money laundering and terrorist financing as a matter of priority during investigations, prosecutions, and subsequent confiscation in all money laundering, terrorism financing and high risk predicate crimes by adopting universal approach to combating ML&TF through generating sound and effective financial intelligence reports for the consumption of law enforcement agencies and maintaining risk-sensitive AML/CFT regime to enhance cooperation and coordination amongst the AML/CFT stakeholders both domestically and internationally.

Through this policy, the government also commits to protecting the financial system and the broader economy in Pakistan from criminality through a robust financial system to ensure that dirty money does not find its ways into the financial system and ensure a robust beneficiary identification system, deterring financial crime as it deprives criminals of the proceeds of their crimes and removes financial support for terrorism and further ensures that targeted financial sanctions are implemented in letter and spirit.

It would ensure a transparent, robust and efficient approach to investigating money laundering and terrorist financing and to the seizure, confiscation and management of criminal assets by supporting relevant agencies in cooperatively achieving this goal.

Published in Dawn, May 10th, 2021

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