Senate panel approves key amendments for FATF compliance

But rejects internal currency movement restriction over govt objections

Shahbaz Rana January 08, 2020

ISLAMABAD: A Senate panel on Tuesday approved amendments in anti-money laundering and foreign exchange regulations’ legal regimes to comply with Financial Action Task Force (FATF) conditions but rejected some proposals it claimed the government had included in the bills under the guise of fulfilling the global body’s requirements.

The Senate Standing Committee on Finance rejected a fiercely contested proposal to restrict the inland movement of United States (US) currency to $10,000 and enhance punishment for money laundering after the Ministry of Finance and the State Bank of Pakistan (SBP) could not convince the members.

The committee, however, approved an amendment, by a thin majority of 5-4, to allow officers to arrest anyone on suspicion of money laundering without court warrants, with Senators belonging to the Pakistan Tehreek-e-Insaf (PTI), Muttahida Qaumi Movement (MQM) and the Balochistan Awami Party (BAP) voting for the amendment to declare money laundering a “cognizable offense”.

PPP Senator Farooq H Naek chaired the standing committee meeting that approved the Foreign Exchange Regulations (Amendment) Bill 2019 and the Anti-Money Laundering (Amendment) Bill 2019 aimed at addressing legal deficiencies pointed out by the FATF.

The bills will now be tabled before the Senate for final approval. After the Senate’s approval, the bills will now again be sent back to the National Assembly for reconsideration in light of the changes made at the level of the standing committee.

The bills have been approved two weeks before a face-to-face Pakistan-FATF Joint Group meeting ahead of an FATF Plenary meeting in Beijing next month.

The government had given an impression that these changes would strengthen its hand in convincing the FATF of Pakistan’s commitment to end money laundering and terror financing. However, the committee members were of the strong opinion that the issues could only be addressed by enhancing exchange of information among financial institutions and improving governance.

The standing committee approved most of the amendments proposed by the government in the Foreign Exchange Regulation Act (FERA) 1947 except the proposal to restrict movement of foreign currency to only $10,000 within the country.

The government had proposed that any person shall be free to move or transfer foreign currency up to a maximum of $10,000 or equivalent in other currencies, physically or otherwise, within Pakistan whereas limits for authorized dealers, exchange companies and money changers shall be prescribed by the SBP.

Committee members were of the view that this clause would be misused by authorities to target political opponents. The standing committee unanimously rejected the proposal.

“Please reconsider the decision, otherwise there will be an issue with the FATF”, said Finance Secretary Naveed Kamran as he requested the committee to reconsider its decision to vote out the amendment.

However, Additional Finance Secretary Kamran Afzal accused the committee of providing protection to money launderers. In a tit-for-tat response, the committee chairman accused the government of protecting money laundering being committed by foreign exchange companies.

The standing committee also approved most of the proposed amendments in the Anti-Money Laundering Act (ALM) of 2010 but did not approve an increase in the imprisonment limit, saying that the Finance Ministry could not establish that increasing the imprisonment limit for money laundering crimes was a requirement of the FATF.

The government had proposed a 10-year sentence for money laundering against the existing punishment of one to 10 years in jail. But the committee approved another amendment to increase the fine for the offence from Rs1 million to Rs5 million.

Farooq Naek disclosed that the Financial Monitoring Unit (FMU) Director General (DG) had agreed with him on Monday that there was no need to make the money laundering offence cognizable. “DG, you agreed with me yesterday to keep the offence non-cognizable. Now be honest”, said Naek while addressing Mansoor Siddiqui.

Naek said that, of the 42 member countries of the Asia Pacific Group (APG), only eight had declared money laundering cognizable.

Currently, money laundering is a non-cognizable offence. Subject to a final vote in the Senate, the investigation officer can now arrest anyone without securing warrants from courts or judicial magistrates.

According to another important amendment, the FMU will be bound to promptly share information on money laundering with foreign jurisdictions instead of waiting for “due administrative process”. Similarly, banks will be bound to promptly share suspicious transactions reports with the FMU instead of the existing limit of within seven days.

The committee also approved an amendment to empower investigation officers to attach property involved in money laundering for six months as against the current period of three months. But it rejected a proposal to allow courts to grant a further extension in the attachment period to up to one year.

According to another amendment, banks would also be bound to file suspicious transactions reports and, upon failing to do so, concerned persons would be liable to five years of imprisonment and a fine of Rs500,000.

DG FMU Mansoor Siddiqui also said on the occasion that heads of compliance of various banks had recently been fired for delays in filing the suspicious transaction reports and bank presidents had been issued warnings.


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