Feb 25 2010 Daniel Seleanu
Pakistan's Senate Committee on Finance approved the Anti-Money Laundering and Combating Terrorist Financing Act, which aims to graduate the existing Anti-Money Laundering Ordinance into an Act of Parliament, i.e., official national law. Senate approval of the Act became a priority after the Financial Action Task Force on money laundering designated Pakistan as a problem jurisdiction, specifically because its AML/CFT laws were temporary. Salman Siddique, finance secretary, told the Senate committee that failure to pass the legislation could result in strict counter-measures against Pakistan by the international community, including refusal to honour its letters of credit.
The committee spent two days debating each clause of the legislation to ensure its compatibility with "realities on the ground". Members addressed a range of concerns, including privacy, property rights, freedom to make bank deposits, prevention of politically motivated enforcement, protection of economic interests, and the inclusion of rape and murder in clauses about terrorism and terror financing.
Senators Haroon Khan, Ilyas Bilour and Safdar Abbasi objected to the scope of authority granted to investigators. They cautioned that abuse of these powers could violate the rights of bank account holders, which would deter foreign investment and provoke capital flight. Senator Ilyas highlighted the possible contradictions between the new AML law and existing banking secrecy rules. He also noted that implementation would be difficult because the informal sector accounted for nearly half of Pakistan's economy. Also present were the minister of finance, budget secretary, director general of the Financial Monitoring Unit and the State Bank of Pakistan's deputy governor and director of banking policy.
Azhar Iqbal Kureshi, director general of the Financial Monitoring Unit, told the committee: "We would ensure that the banking system would not suffer due to implementation of the law." Depositors would be protected by 15 protocols that define what constitutes sufficient evidence for triggering suspicious transaction reports. Furthermore, he said, law enforcement agencies required court permission before escalating an investigation.
Kureshi also clarified some aspects of the law's implementation. For example, the National Accountability Bureau would investigate proceeds from corruption; terrorism financing would be investigated by the Federal Investigation Agency and drug money would be probed by the Anti-Narcotics Force. The law will also target smugglers by strengthening existing provisions of the Customs Act. The FATF will reconvene in June 2010 to re-evaluate its list of problem jurisdictions. By finally passing the Anti-Money Laundering and Combating Terrorist Financing Act, Pakistan would address FATF concerns and thereby improve its international standing.
