FATF and Intra-Institutional Dialogue

It has been supposedly identified by one out of nine FATF-Style Regional Bodies—FSRBs, Asia/Pacific Group on Money Laundering (APG) in its Mutual Evolution Report of Pakistan (MER-Oct-19) that there are 4 non-compliant (NC) areas, out of FATF’s 40 recommendations, over which Pakistan has to concentrate in the war against Money Laundering (ML) and Terrorism Financing (TF).

Out of these 4 critical fields, the parliament of Pakistan has successfully tackled one i.e. Mutual Legal Assistance: freezing and confiscation by unanimously approving the Mutual Legal Assistance (Criminal Matters) Act, 2020. Henceforth, by enacting this law, Pakistan has been able to regulate and solicit mutual legal assistance on criminal matters with any country of the world on the principle of reciprocity reduced in writing.

However, to encounter other three vital subjects i.e. Designated Non-Financial Business and Professionals (DNFBPs); Customer Due Diligence; Transparency and Beneficial Ownership of Legal Arrangements and Regulation and Supervision of DNFBPs, Pakistani PTI government after getting approval from the lower house of Parliament (National Assembly) introduced two bills—Anti-Money Laundering (Second Amendment) Act, 2020 & Islamabad Capital Territory Waqf Properties Act, 2020—in the upper house of the Parliament (Senate). Unfortunately, both the bills have not been passed by the Senate because of the alleged statement of the Leader of the House Senator Dr. Shahzaad Waseem against the leaders of the opposition parties.

Now, to address this query that why the opposition parties have to reject the proposed AMLA amendments, we have to look at the particulars of the proposed amendments. AMLA, 2010 was originally passed by Pakistan People’s Party in its tenure (2018-2013). In the current amendments, Pakistan tried to improve its AML regime by conferring the status of AML/CFT regulatory authority on the following regulators SBP, SECP, FBR, National Saving Supervisory Board, and Pakistan Post Supervisory Board.

FBR has been declared as AML/CFT regulatory authority for the real estate agent, jewelers, dealers in precious metals & stones as well as for accountants who are not the members of ICAP and ICMAP. The other Self-Regulatory Bodies (SRBs) such as the Institute of Charted Accounts of Pakistan (ICAP), Institute of Cost and Management Accountants of Pakistan (ICMAP) and Pakistan Bar Council has been declared as AML/CFT regulatory authority for their members. Furthermore, there shall be an Oversight Body for SRBs which can monitor, prescribe regulations, and even impose sanctions on SRBs.

All these DNFBPs and FIs regulators have been declared as Reporting Entities. Every reporting entity shall conduct Customer Due Diligence (CDD) of their customer/clients in respect of their identifications, the real beneficial owners, and also to monitor the nature & purpose of business relationships. It has also been made obligatory for every reporting entity to maintain the records of all transactions for at least five years.

In the proposed amendments, a person shall be guilty of the offence of Money Laundering if he acquires, possesses, and conceals the origin of such property which is proceeds of crime or holds the same on behalf of any other person. The power of arrest by any investigating officer/agency has been omitted in the suggested amendments. The offence of ML has also been recommended to make cognizable in which police can arrest without warrant of the concerned court. The legal person who commits an offence of ML shall also be liable to be proceeded against and punished accordingly.

It might also be a point of inflection for the opposition parties that in the proposed amendments, the Director-General Military Operations and Director General (C) ISI has also been made the members of the National Executive Committee (NEC) and General Committee (GC). As we all know that under the AMLA, NEC is the highest body that has to frame national policy and strategy for combating ML/FT. Ministers of Finance, Foreign Affairs, Law & Justice, and Interior, as well as the Governor State Bank of Pakistan, Chairman SECP, Chairman NAB, and Director General Financial Monitoring Unit (FMU), are all its members. Whereas the General Committee (GC), comprising the secretaries of all the aforementioned ministries amongst others, has to assist the NEC.

In the very session of the Senate in which two FATF related bills have been rejected, Senator Mian Raza Rabbani was of the view that Pakistan, since the demise of Quad-i-Azam Muhammad Ali Jinnah, has been transformed from a progressive welfare state to a National Security State. In reality, he advances his speech, Pakistan has made a lot of progress from the National Security state to a Hyper National Security where the Hybrid Democratic Model has actually been imposed.

He also opines that in National Security State, the destiny of the country rests in the hands of the armed forces. Militaries have not only to lead but also to shape the whole society. Taking into account the present scenario, every citizen of Pakistan feels apart from the homeland as each and every fundamental rights guaranteed by the Constitution have been privatized. It seems that soon every common man will come out for defiance. In the prevalent state of affairs, he also emphasized that we—the committee of the whole of Senate—again need to start an intra-institutional dialogue amongst the basic organs of the state.

We all hope that on the issue of national prestige and interest all the stakeholders of the state may have detailed debates of the enemies’ devious games in the shape of FATF related concerns; and ultimately, our state-institutions will be able to formulate a comprehensive approach against the external international organizations’ modern form of aggressions.

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