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THE revisions to the Anti Money Laundering and Combating the Financing of Terrorism Regulations may be a positive move but hardly go far enough. For instance, under the new regulations “banks/DFIs shall not open or maintain anonymous accounts or accounts in the name of fictitious persons or numbered accounts” and “shall not provide any banking services to proscribed entities and persons or to those who are associated with such entities and persons, whether under the proscribed name or with a different name”. The layperson can be forgiven for being puzzled. Does this mean that before the new regulations, banks were able to open anonymous accounts, numbered accounts, accounts in the name of proscribed entities and persons connected with the latter? If so, how was this possible after years of fighting a war against internal insurgent groups widely reported to be using funds earned from illegal activities to finance their operations? If not, why were these regulations issued in the first place?

There is much in the new regulations that makes one wonder if we have been serious in our campaign against militancy all along. For example, we know that money is moving through the clearing houses of Quetta and Peshawar in quantities so large that one cannot even guess what kind of economic activity is driving these. If it’s true that banks have not been maintaining enough data about the intercity movement of funds, especially data that would help identify the beneficiary, then that is an oversight that must be explained. Will banks now maintain a list of proscribed groups and individuals associated with them so as to be able to deny them account-opening privileges? Much of what needs to be done to ensure the financial system has no entry points for illicit money — for money belonging to proscribed groups and for tax-evaded wealth — requires greater cooperation between the financial system and authorities such as the Federal Board of Revenue and interior ministry. Let’s hope this first step towards cleaning up our financial system is followed up by other measures required to make anti money-laundering and terror-financing efforts more effective.

Comments (1) Closed

Amir Dewani Sep 15, 2012 10:21am
Billions of dollars have been moved to the so-called safe-haven accounts by way of money laundering , not only in Pakistan but in countries like Greece, Italy, Spain and more. The G-20 group of rich economies of the world has been pursuing this serious issue since the year 2008 and before. Different countries have adopted different measures to recover the black money and the evaded tax revenues in collaboration with the OECD. Pakistan is perhaps the only country where nothing happens because its own big-wigs are themselves involved. This is evident from the refusal of the government to comply with the decision of the Supreme Court to write a letter to the Swiss authorities as is well known to all Pakistanis. In Asia perhaps India and Pakistan are the two top most countries where such crimes are being committed at a large scale under the nose of their own governments. In this connection The Tax Justice Network is doing a lot of research in the matter of tax transparency and against the tax-havens. According to one of its report, the richest persons and corporations of the world are hiding at least $21 trillion, and another $32 trillion have been stashed in the Cayman Island and Switzerland. And for information of all concerned $21 trillion equal to the combined GDP of the USA and Japan. And surprisingly the top ten banks of the world have been serving as conduits in such illegal transfers. As such, your editorial concerns are right. Remember Pakistan is poor not because of lack of resources, but because of the culprits hiding in your sleeves who are doing this act of money laundering/smuggling/drug-pushing which results in lack of revenues and investment so badly needed by you. The intellectuals, writers and media can play a big role to highlight this issue with more determination as is being done by you.