Govt agrees to toughen anti-money laundering laws

Move comes after a global watchdog pointed out slackness in law enforcement.

ISLAMABAD:

Pakistan has decided to amend existing laws to combat financing of terrorism after an international anti-terrorism financing watchdog highlighted that despite ‘observing’ violations, anti-money laundering laws (AML) were not being enforced.

The decision was taken on Friday during a meeting, chaired by Finance Minister Dr Abdul Hafeez Shaikh, held to review the status of AML and to plug loopholes in the existing laws.

Informed sources told The Express Tribune that the government will soon table the AML Act 2010 and another law pertaining to the inward movement of foreign currency to address concerns raised by the US through the Financial Action Task Force (FATF).

FATF is an inter-governmental body working for the promotion of national and international policies to combat money laundering and terrorist financing.

According to an official handout, the meeting “noted that despite a number of anti-terrorist cases, the prominence required to build AML aspects required further strengthening”.

The sources said the US had expressed concern that despite the ‘observation of terrorist financing’ by the Financial Investigation Unit of the central bank, the enforcement of the laws was very weak.

The State Bank of Pakistan’s (SBP) unit is required to report such violations to the anti-terrorist courts; yet no action is being taken in most cases.

The FATF has in the past termed Pakistani laws as ‘cosmetic in nature’.

Another source said that law enforcement agencies have been applying criminal charges in such cases, letting the suspects go scot-free.

“There is a need to increase the capacity of law enforcement agencies to devote due attention to incidents of terrorism,” the official handout stated.

The FATF has long been asking Pakistan that its laws should be in line with 40 recommendations of the FATF. These recommendations provide a broader framework for drafting anti-money and anti-terrorist financing laws by the national governments.   Pakistan has made significant progress but the enforcement of these laws is still very weak.

The committee noted that there has been recognition of efforts by Pakistan at various international forums; however, there is “more to be done to fill the gaps that still exist (in these laws)”.

The committee asked the Financial Management Unit of the finance ministry to take urgent steps to fill some of the gaps that are found in the existing regime and seek assistance to enhance the capacity of law enforcement agencies in the implementation of the AML regime.

“The parliamentary panel has been asking the finance ministry for the last one year to bring the AML Act in parliament for introducing required amendments,” said head of Senate Standing Committee on Finance and Revenue Senator Ahmad Ali. “The committee had passed the AML Act in haste on plea of the government that a delay in approval might invoke international sanctions on Pakistan,” he added.

Published in The Express Tribune, January 7^th, 2012.