| It is agreed that Pakistan needs to enact an | | | | in this respect under several UN Conventions and |
| Anti-Money Laundering legislation to comply with its | | | | annual reporting of anti-money laundering measures |
| international obligations and commitments. However, | | | | by Pakistan under US Law. From another point of |
| there is a growing consensus that the Anti-Money | | | | view, Pakistan, by virtue of being a developing |
| Laundering bill presently pending before the parliament | | | | country should strive to adopt anti-money laundering |
| be modified to accurately incorporate these | | | | and terrorist financing policies in order to help, protect |
| obligations. | | | | and build its economy. |
| In the wake of post 9/11 counter-terrorism efforts, | | | | In this regard RSIL considers that there is no need to |
| and a universal desire to eliminate financing | | | | create Special Courts on anti-money laundering, as |
| opportunities for sponsoring acts of terrorism, it has | | | | proposed in the bill. The charge of money laundering |
| become crucial for states to be able to keep track | | | | should be framed either in the courts that try |
| of any suspect transfers of money. This requires the | | | | predicate offences or in general courts as a |
| assistance of financial institutions and most banks | | | | stand-alone charge. Other states have not |
| have already developed compliance departments with | | | | encouraged setting up specialized anti-money |
| specific Anti Money Laundering (AML) contact points | | | | laundering courts. Moreover, the FATF |
| within such departments. However, Pakistan needs to | | | | Recommendations do not require it, then why should |
| enact a proper legislation for ensuring such | | | | Pakistan set up a parallel judicial system for |
| compliance, and properly investigating, criminalizing and | | | | prosecuting offences that are inherently linked with |
| prosecuting money laundering offences | | | | existing offences that are tried in existing courts? |
| The enactment of an anti-money laundering law has | | | | Furthermore, under international requirements, money |
| been an agenda item at most top level meetings and | | | | laundering should be prosecutable as a stand-alone |
| Pakistan has been under pressure for the quick | | | | crime without first convicting an offender for the |
| passage of the said law from western governments, | | | | predicate offence. The proposed law does not |
| loan granting institutions and other international | | | | comply with this obligation. |
| forums such as the Financial Action Task Force | | | | RSIL maintains that the definition of money |
| (FATF) and the Asia Pacific Group (APG). | | | | laundering in the proposed bill is also flawed. The |
| Furthermore, United Nation Security Council Resolution | | | | correct definition is found in the Vienna Convention or |
| 1617, passed under Chapter VII of the UN Charter | | | | the Palermo Convention. The said definitions are |
| and therefore binding on all member countries, | | | | approved by FATF. They calibrate the role of the |
| 'Strongly urges all Member States to implement the | | | | main offender and the accomplice with the penal |
| comprehensive, international standards embodied in | | | | consequences, whereas, the definition in the present |
| the FATF Forty Recommendations on Money | | | | bill is unnecessarily wide. |
| Laundering and the FATF Nine Special | | | | RSIL also maintains that the bill must specifically |
| Recommendations on Terrorist Financing'. | | | | exclude such remittances that are made for |
| The Financial Action Task Force, an | | | | avoidance of income tax as fiscal offences are not |
| inter-governmental body whose purpose is the | | | | included in the list of predicate offences. Furthermore, |
| development and promotion of national and | | | | there is a need for a provision to clarify if the law will |
| international policies to combat money laundering and | | | | be applicable to money laundered prior to its coming |
| terrorist financing, developed the Forty plus Nine | | | | into force. |
| Recommendations, which now form the benchmark | | | | The existing bill formulates a complex and a confusing |
| for anti-money laundering initiatives and measures. | | | | regime, both for rendering assistance and to obtain |
| The AML bill is presently pending before the | | | | assistance in money laundering investigations and |
| parliament for approval and the National Assembly | | | | prosecutions. We are of the view that the said |
| Standing Committee on Finance & Revenue | | | | provisions be replaced with provisions similar to the |
| ("Committee") has already been briefed by Mr. Omar | | | | one on mutual legal assistance found in article 46 of |
| Ayub Khan on the said bill earlier this month and the | | | | United Nations Convention Against Corruption and |
| Committee has also made certain objections to the | | | | article 18 of United Nations Convention Against |
| provisions so far discussed. | | | | Transnational Organized Crime; as the same are |
| The Committee is likely to discuss the rest of the bill | | | | considered to be accurate legislative formulations of |
| in the coming week and since the provisions of the | | | | the MLA regime. |
| bill are now under consideration and the text of the | | | | RSIL team is of the view that the Financial Monitoring |
| bill has been opened up by the Committee itself for | | | | Unit (FMU), being created under the proposed bill, |
| discussion, the Research Society of International Law | | | | which will be authorized to receive reports on |
| (RSIL) thought it appropriate to conduct a workshop | | | | suspicious financial transactions from the banks, has |
| for the stakeholders to highlight and discuss its | | | | been given unnecessary wide powers of summoning, |
| concerns regarding the text of the bill. The said | | | | production of record and conducting investigation. |
| workshop was attended by representatives from 20 | | | | Hardly any other state has done so. FATF |
| governmental, sub-state and financial organizations | | | | Recommendations also do not require this. Therefore, |
| and a productive debate on the subject was thus | | | | the investigative powers of the FMU should be |
| initiated. | | | | withdrawn and the bill be modified accordingly, |
| It is pertinent to mention that the said Committee | | | | otherwise, this will have serious implications for banks |
| has not yet been given any legal briefing on the bill as | | | | and other financial institutions in the country in terms |
| such. However, RSIL is likely to be invited by the | | | | of compliance and reporting requirements. |
| Committee for a formal presentation on the bill. | | | | Investigation should only be the domain of the |
| Eminent lawyer and international law expert, Mr. | | | | prosecuting agency that has a functional link with the |
| Ahmer Bilal Soofi is of the opinion that the bill | | | | predicate offence. |
| presently being debated in the Parliament travels far | | | | Moreover, most of the provisions of the existing bill |
| beyond the minimum requirements of compliance. | | | | have been copied from the flawed Indian law titled |
| According to him, the bill needs to be modified; | | | | 'The Prevention of Money Laundering Act' passed in |
| otherwise, it shall create serious operational | | | | 2002. While, there is no harm in copying good |
| impediments which will even make the minimum | | | | provisions from Indian legislations on the same |
| compliance more difficult. Resultantly, at the end of | | | | subject, this particular Indian law has not generally |
| the day, despite having made the law, the | | | | been accorded approval internationally and has in fact |
| international community will view Pakistan as not | | | | faced criticism at international forums such as the |
| seriously complying with anti-money laundering | | | | Asia Pacific Group (APG), especially during the 2005 |
| measures and obligations. Mr Soofi represented | | | | APG conference in Australia. |
| Pakistan in the UN General Assembly negotiations on | | | | It is RSIL's position that an anti - money laundering |
| the United Nations Convention against Corruption | | | | law must be passed soon because Pakistan, under |
| (UNCOC), which contained provisions on money | | | | international law, is obliged to do so. In this regard |
| laundering and also participated in the FATF/APG | | | | Specific Recommendations of Financial Action Task |
| evaluation of Pakistan's compliance. | | | | Force (FAFT) are to be implemented within Pakistan |
| Pakistan is not only obliged to adopt such policies | | | | through compliance divisions of financial institutions |
| under UNSC Resolution 1617, but there are other | | | | and other regulatory measures. In summary, RSIL's |
| obligations under the UN Convention on Drugs, an | | | | position is that the bill must be corrected and suitably |
| obligation to provide Mutual Legal Assistance to | | | | modified so that it ensures smooth implementation of |
| requesting states, a strong international state practice | | | | anti-money laundering measures in Pakistan. |