A decision worth appreciation
The federal cabinet is learnt to have approved a plan to formulate stricter laws and strengthen institutions to curb terror financing. Pakistan needs to comply with 26 points of o Financial Action Task Force (FATF) action plan to get off the task force’s ‘grey list’ over the next 15 months. The plan was approved last in a cabinet meeting chaired by the caretaker Prime Minister Justice (Retd) Nasirul Mulk.
The federal cabinet has authorized the Ministry of Finance to bloster the financial monitoring Unit (FMU). The ministry was also empowered to suggest changes in the Anti-Money Laundering ordinance of 2010 and Foreign Exchange Regulation Act of 1947, increasing punishment and penalties to curb currency smuggling, one of the four areas of FATF concerns. As NACTA and FIA have shied away from the responsibility of preparing the crucial National Risk Assessment (NRA) report because these agencies needed the assistance and input of other government departments. Hence, a joint meeting of NACTA, FIA, SECP, SBP and CTD was held the other day to deliberate over the broad parameters of the report.
There is no denying the fact that Pakistan’s existing institutional framework is incapable of enforcing the action plan that needs to be implemented by September next year. The previous PPP and PML-N government deliberately avoided to strengthen the Anti Money Laundering law to protect the vested interest although Pakistan was placed on ‘grey list’ in 2012 and removed from it in 2015 when the government assured the UN that it is serious to streamline the Anti-Money Laundering and counter terrorism financing regime. But later did not fulfill its responsibility and the country was again placed on ‘grey list’ in June. The action plan implementation will determine whether Pakistan remains on ‘grey list’ or will be let off the hook.
Nine conditions of UN Security Council Resolutions highlights concerns about weak terror financing regime. Eight more relate to commitment addressing concerns regarding prosecution of terror financing cases while four are about curbing cross border currency movement and five recommendations relate to improving the supervision of mechanism of banks and companies. The country would have to implement all conditions within 15 months. Originally FATF wanted to allow just nine months for full compliance.
The FMU is working below its capacity because of shortage of staff to oversee policy implementation of anti-money laundering and countering financing terrorism. But this bitter fact must not be ignored that bulk of the money laundering had been done by the ruling political elite by coercing and compelling the public servants and executives of banks to collude with them. The Supreme Court verdict in Panama Papers case and the National Accountability Court order in Avenfield Reference against former Prime Minister Nawaz Sharif are the classic examples. The FIA probe in Rs. 35 billion money laundering against former President Asif Zardari and his sister Faryal Talpur and the arrest of Summit Bank President Hussain Lawai and two executives of Sindh Bank and UBL points to the insatiable lust of political elite for money laundering for which banking institution is used.
Interestingly, Faryal Talpur has submitted a reply in the Apex Court with regards to Rs. 35 billion money laundering scam in which she has taken a strange stance the Anti-Money Laundering Law applies to public servants only. But the law does apply to every person. Necessary legislation to strengthen the Anti-Money Laundering and counter terrorism laws will be done by the new government when it comes to power. According to the existing law, any person committing the offence of money laundering is liable to serve and imprisonment term of maximum 10 years, pay a fine extended to Rs. 1million and forfeiture of prosperity.
It has also been decided to set up a general Committee headed by Secretary Finance along with the Inter-ministerial Executive Committee headed by the Finance Minister to effectively address Anti-Money Laundering challenges. Another proposal is to set up a national steering group to endure timely implementation of policies and FATF related actions. A number of FATF’s 26 points Action Plan milestone fall within the purview of provincial police and home departments, which requires coordination with the Ministry of Interior, FIA and other authorities concerned. This necessitates closer coordination between federal and provincial authorities to enforce the action plan within the stipulated timeframe.