Combating Money Laundering and Counter Terrorist Financing in Pakistan

 

Aware of the prevalence of corruption, narcotics trafficking and terrorism the authorities of Pakistan have focused on tackling these predicates but failed in taking into account money laundering and terrorism financing. As on December 2007, money laundering (ML) and terrorism financing (TF) is criminalized in the country.

 

How Criminals launder money in Pakistan?

• purchasing real estate,
• abusing informal channels in Pakistan,
• laundering money through trade,
• Funds for terrorism (including bank robbery, kidnap for ransom, and proceeds of drugs flowing from Afghanistan)
• abusing corporate entities to access the financial sector,
• cash couriers and
• misuse of charities facilitating terrorist financing.

Combating Money Laundering and Counter Terrorist Financing:

Anti-Money Laundering Act, 2010(AMLA):

For prevention of money laundering and

forfeiture of property that is derived from or is involved in money laundering.

 

Financial Monitoring Unit (FMU):

For carrying out the operation of Anti-Money Laundering law and to meet its purpose.

It was established with the approval of National Executive Committee and established in the State Bank of Pakistan (SBP).

Function: Recieve reports on Currency Transaction (CTR) and suspicious Transaction Reports (STR) of specified monetary limit.

The FMU is required to:

• Analyze the STR’s and CTR’s;
• To co-operate with FIUs and intelligence agencies of other countries.
• Disseminate information to the investigating agencies;
• Create and maintain data base of STRs and CTRs;
• To frame regulations in consultation with SBP.

 

Filing with FMU STRs and CTRs20A by major financial institutions:

• Illegal activities or the same is intended or conducted in order to hide or disguise proceeds of crime;
• An attempt to evade any requirement of Anti-Money Laundering Law; and
• Is an outcome of unlawful purpose; and
• Involves financing of terrorism.

 

Major Provisions:

• Acquisition, possession, conversion transfer or use of such property which is proceeds of crime constitutes the offence of money laundering.

Punishment: imprisonment upto 10 years or fine of 1 million or both

• Where a property is money laundered, an officer investigating such matter may make an order for the attachment of the property.
  • A person is guilty of offence:
  • Acquires or possesses or converts or transfers proper knowing or having reason to believe that such property is proceeds of crime
  • renders assistance to another person for the acquisition,
  • conversion,
  • possession or
  • transfer of, or
  • for concealing or
  • participates in association, conspires or commits, attempts to comitt, aids, abets, facilitates on conceals the acts of crime.
• All courts of sessions established under the Code of Criminal Procedure, 1898, within its territorial jurisdiction have the power to try and adjudicate the offences falling within the purview of AMLA.
• All offences under the AMLA are not cognizable and non bail able.
• An appeal against any final decision or order of the court established under the Act lies before the High Court ( 60 days).
• Specified offences falling within the scope of Pakistan Panel Code, 1860, The Arms Act, 1878, The foreigners Act, 1946, The Copyright Ordinance, 1965, Securities and Exchange Act, 1969, The Emigration Ordinance, 1979, The Control of Narcotic Act, 1997, National Accountability Ordinance 1999, and The Registered Designs Ordinance, 2000 have been made predicate offences under the Act.
• The contravention of the provisions of AMLA, the person or the company shall be deemed to be guilty and shall be punished.
• The Director General FMU can seal a suspected property on the compliant of NFBP or any financial institution for a period of 15 days.
• The following are examples of potential suspicious transactions for both money laundering and terrorist financing.
• The Act is not applicable in relation to fiscal offences except:
• import prohibitions act of smuggling, mis-declarations,
• and fiscal fraud’s under the Customs Act, 1969.

 

What accounts to money laundering:

• Transactions which do not make economic sense.
• Transactions involving transfers to and from abroad should state occupation of the sender is not commensurate with the level or type of activity
• Transactions involving embassy and foreign consulate accounts.
• Transactions inconsistent with the customer’s business.
• Transactions involving large amounts of cash. Investment related transactions.
• Transactions involving unidentified parties.
• Transactions involving insurance.
• Transactions involving structuring to avoid reporting or identification requirement.
• Transactions involving accounts.