It is agreed that Pakistan needs to enact anti-money laundering legislation to meet its international obligations and commitments. However, there is a growing consensus that the anti-money laundering bill currently pending before parliament should be amended to accurately incorporate these obligations.
In the wake of post-9/11 counterterrorism efforts and the universal desire to eliminate funding opportunities to sponsor acts of terrorism, it has become crucial for states to be able to track any suspicious money transfers. This requires the assistance of financial institutions and most banks have already developed compliance departments with specific anti-money laundering (AML) contact points within those departments. However, Pakistan needs to enact adequate legislation to ensure such compliance and properly investigate, penalize and prosecute money laundering offences.
The enactment of an anti-money laundering law has been an agenda item at most high-level meetings and Pakistan has been under pressure for swift passage of such a law by Western governments, granting institutions of loans and other international forums such as the Financial Action Task. Force (FATF) and the Asia Pacific Group (APG).
Additionally, United Nations Security Council Resolution 1617, passed under Chapter VII of the United Nations Charter and therefore binding on all member countries, ‘Strongly urges all member states to implement the comprehensive international standards embodied in the FATF Forty Recommendations on Money Laundering and the FATF Nine Special Recommendations on Terrorist Financing’.
The Financial Action Task Force, an intergovernmental body whose purpose is the development and promotion of national and international policies to combat money laundering and the financing of terrorism, developed the Forty plus Nine Recommendations, which now form the benchmark for initiatives and measures against money laundering.
The AML Bill is pending before parliament and the Standing Committee on Finance and Revenue of the National Assembly (“Committee”) has already been briefed by Mr. Omar Ayub Khan on the said Bill earlier this month. and the Committee has also secured objections to the provisions discussed so far.
The Committee is likely to discuss the rest of the bill next week and since the provisions of the bill are now under consideration and the text of the bill has been opened by the Committee itself for discussion, the Research Society of International Law (RSIL) considered it appropriate to hold a workshop for stakeholders to highlight and discuss their concerns regarding the text of the bill. The workshop was attended by representatives of 20 government, sub-state and financial agencies and thus began a fruitful debate on the subject.
It is pertinent to mention that said Committee has not yet received legal information on the bill as such. However, the Committee is likely to invite RSIL to a formal presentation of the bill.
The eminent lawyer and expert in international law, Mr. Ahmer Bilal Soofi, is of the opinion that the bill currently being debated in Parliament goes far beyond the minimum compliance requirements. According to him, the bill needs to be modified; otherwise, it will create serious operational impediments that will even make it difficult to meet the minimums. As a result, at the end of the day, despite having enacted the law, Pakistan will be considered by the international community to be in serious non-compliance with anti-money laundering measures and obligations. Mr. Soofi represented Pakistan in the UN General Assembly negotiations on the United Nations Convention Against Corruption (UNCOC), which contained provisions on money laundering, and also participated in the FATF/APG assessment of compliance. from Pakistan.
Pakistan is not only obligated to adopt such policies under UN Security Council Resolution 1617, but there are other obligations under the UN Drug Convention, the obligation to provide Mutual Legal Assistance to applicant states, strong international state practice in this regard under various United Nations Conventions, and Pakistan’s Annual Anti-Money Laundering Measures Report under US law. From another point of view, Pakistan, by virtue of being a developing country, should strive to adopt anti-money laundering and anti-terrorist financing policies to help, protect and build its economy.
In this regard, RSIL considers that it is not necessary to create Special Courts on money laundering, as proposed in the bill. The charge of money laundering should be framed in courts dealing with predicate offenses or in general courts as a separate charge. Other states have not encouraged the creation of specialized anti-money laundering courts. Furthermore, the FATF Recommendations do not require it, so why should Pakistan establish a parallel court system to prosecute crimes that are inherently linked to existing crimes that are tried in existing courts?
Furthermore, under international requirements, money laundering must be prosecutable as a stand-alone offense without first convicting an offender of the predicate offence. The bill does not meet this obligation.
RSIL maintains that the definition of money laundering in the proposed bill is also flawed. The correct definition is found in the Vienna Convention or the Palermo Convention. These definitions are approved by the FATF. They gauge the role of the primary offender and enforcement of criminal consequences, while the definition in the present bill is unnecessarily broad.
RSIL also maintains that the bill should specifically exclude those remittances that are made to avoid income tax, as tax crimes are not included in the list of predicate offences. In addition, there is a need for a provision clarifying whether the law will be applicable to money laundering before it comes into force.
The existing bill formulates a complex and confusing regime both for assisting and obtaining assistance in money laundering investigations and prosecutions. We are of the opinion that such provisions should be replaced by provisions similar to the mutual legal assistance found in article 46 of the United Nations Convention against Corruption and article 18 of the United Nations Crime Convention. Transnational Organized; since they are considered precise legislative formulations of the ALM regime.
The RSIL team is of the opinion that the Financial Monitoring Unit (FMU), created under the proposed bill, which will be authorized to receive reports on suspicious financial transactions from banks, has been given unnecessarily extensive powers of convocation, producing records and conducting an investigation. Hardly any other state has done it. The FATF Recommendations also do not require this. Therefore, the investigative powers of the FMU must be withdrawn and the bill amended accordingly, otherwise this will have serious implications for banks and other financial institutions in the country in terms of compliance and reporting requirements. The investigation must be the exclusive responsibility of the Public Ministry that has a functional link with the underlying crime.
Furthermore, most of the provisions of the existing bill have been copied from the flawed Indian law entitled ‘Prevention of Money Laundering Act’ passed in 2002. While there is nothing wrong with copying good provisions from the Indian laws on the On the same subject, this In general, the Indian law in particular has not received international approval and, in fact, has faced criticism in international forums such as the Asia Pacific Group (APG), especially during the 2005 APG conference in Australia.
RSIL’s position is that an anti-money laundering law should be passed soon because Pakistan, under international law, is obliged to do so. In this regard, the Financial Action Task Force (FAFT) Specific Recommendations will be implemented within Pakistan through the enforcement divisions of financial institutions and other regulatory measures. In short, RSIL’s position is that the Bill needs to be properly corrected and amended to ensure smooth implementation of anti-money laundering measures in Pakistan.
