Bringing back the looted money

Prime Minister Imran Khan stormed the elections, taking his party through the gates of victory with two strong bows in his quiver “Accountability and transparency.” Now he and his cabinet realises the scourge of money laundering that costs our economy in billions by flooding the Pakistani rupees in the international market thereby adding to its depreciation.

Recently in a meeting with British Home Secretary Mr Sajid, PM Imran khan decided to form a declaration to cooperate together in order to bolster accountability. One ought to acknowledge that the declaration in theory represents an intention of the Government of Pakistan to tackle a serious global issue. A question which remains is whether a mere declaration suffices to tackle an apparently impregnable vice of money laundering? Is this intention an elephant without tusks? Does it hold much practical significance in enforcing laws against money launderers?

One must understand that money laundering is asymmetrical. It feeds off globalisation obliterating the sovereignty of states as it silently moves from one country to another. Consider this hypothetical example: If proceeds from crime, let’s say by tax evasion (which is not a crime in countries like Switzerland) is carried out in Pakistan and, the money from that tax evasion is then transferred to several bank accounts in Dubai, Hong Kong and Switzerland, from there it is transferred under the name of several companies in Cayman Islands and finally a variety of assets are purchased under the names of those companies in the UK, the USA, France.

Now this example shows that due to the ease with which financial transactions can be made with a single click of a button money laundering, in 21^st century has become convenient and potentially impregnable. The problem with enforcement still looms over the global trajectory as the same criminal property passes through multiple countries. Such is the borderless, stateless nature of this offence that merely a declaration between Pakistan and the UK is miles away from being sufficient because even if the UK is prepared to cooperate and extradite suspected money launderers, there is no certainty that other countries from where the criminal property has passed will cooperate earnestly without international agreements compelling them to do so. If such cooperation is not certain then the prosecution for money laundering becomes a distant reality.

The problem yet glares more brightly, for in order to enforce the penalty against money laundering any of the countries named in the example would need to be certain where the laundering occurred. So, as simple as it may sound courts go at length to determine the painstaking question of the country of occurrence to ascertain whether the matter will be dealt by the laws of that country. One cannot say outrightly that it occurred in Pakistan because that’s where the process of money laundering was initiated or simply that the money involved belonged to the coffers of Pakistan because equally criminally culpable stages may have occurred in other countries. Due to a lack of solid framework towards tackling money laundering, courts of different countries will squabble and contest one another’s jurisdictions at length at the cost of money and time.

Another fertile ground for money launderers is the lack of harmonised laws in legal systems for money laundering. Currently, Pakistan’s Anti-Money Laundering Act of 2010 only recognises the offence of money laundering committed in another foreign country if it would be an offence in Pakistan as well. An offence committed in the UK which attracts punishment there but, is not recognised in Pakistan as an offence will not be recognised as money laundering and vice versa. This loosely arranged position to enforce laws against money laundering asserts that foreign governments and their rules are not to be trusted and exploiting this mistrust between them are the money launderers who evade justice. Enforcement against money laundering will become a strenuous exercise if the laws of countries on this issue differ, blurring the prospect of a seamless international co-operation.

The State Department has reported that Pakistan loses nearly $12 Billion per annum to money laundering. If the government of the day is bent on stopping the bleeding of the national economy, then it is imperative that it leaves no diplomatic stone unturned. Relentless effort should be placed in advocating for a multilateral treaty involving multiple states aiming to settle the issue of jurisdiction and the aiming to homogenise the constitutive elements of money laundering. With the treaty guiding courts of signatory states, they will find it easier to deal with the otherwise difficult question as to where money laundering occurred. The number of unnecessary litigation will be reduced and states will enforce laws robustly catching the money launderers in the legal net. Until then chanting of “bringing back the looted wealth” will be seen only as political gimmickry. Surely, such is the plight that more needs to be done than porous declarations and a few handshakes with foreign officials.

Published in The Express Tribune, October 30^th, 2018.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.