Passage of FATF bills sans consensus

Ajoint session of Parliament last week passed three bills related to the Financial Action Task Force (FATF) amid noisy protest by the opposition and a walkout later. The opposition accused the government of not allowing them to bring amendments and speak on the vires of the bills. Prime Minister Imran Khan, however, speaking on the occasion, termed it as a landmark achievement in the context of efforts to prevent money laundering and meet the conditions to get rid of the FATF grey list.

FATF, a global monitoring agency, sprang up in 1989, in the backdrop of the horrors of terrorism. The international body was tasked to set standards to promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system, based on a coordinated strategy to meet such challenges. Also associated with it is the Asia Pacific Group (APG) which implements anti-money laundering policies and initiatives besides securing an agreement to establish a more permanent regional anti-money laundering regime. Both FATF and APG now act as watchdogs to assess the capacity and efforts of member countries in combating money laundering and terror financing.

Pakistan, being a member and under jurisdiction and increased monitoring of the two bodies, is under an obligation to overcome the strategic deficiencies, within a timeframe as pointed out by the FATF and APG. The statement on Jurisdictions under Increased Monitoring, adopted in February 2020, would remain in effect for countries that besides Pakistan included Albania, Bahamas, Barbados, Botswana, Cambodia, Ghana, Myanmar, Jamaica. Nicaragua, Panama, Syria, Uganda, Yemen and Zimbabwe. Pakistan found a breathing space for compliance with the FATF conditionalities as time for evaluation was extended due to Covid-19.

The FATF webpage suggests that it was in June 2018 that Pakistan made a commitment to working with FATF and APG in order to strengthen its Anti Money Laundering (AML) and Counter Finance Terrorism (CFT) regime and to address its strategic deficiencies related to counter-terrorist financing. Towards this, Pakistan has made progress in a number of areas in its action plan, including risk-based supervision and pursuing domestic and international cooperation to identify cash couriers. It was however still found to be lagging behind and was therefore asked to demonstrate that remedial actions and sanctions were applied in cases of AML/CFT violations, relating to Terror Finance (TF) risk management and Targeted Financial Sanctions (TFS) obligations; and demonstrate that competent authorities were cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS). It was also asked to demonstrate the implementation of cross-border currency and BNI controls at all ports of entry, including applying effective, proportionate and dissuasive sanctions. It was also to show that law enforcement agencies (LEAs) are identifying and investigating the widest range of TF activity and that TF investigations and prosecutions target designated persons and entities, and those acting on behalf of or at the direction of the designated persons or entities. It was further required to demonstrate that TF prosecutions result in effective, proportionate and dissuasive sanctions; effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all 1267 and 1373 designated terrorists and those acting for or on their behalf, including preventing the raising and moving of funds, identifying and freezing assets (movable and immovable), and prohibiting access to funds and financial services; demonstrate enforcement against TFS violations, including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases; and demonstrate that facilities and services owned or controlled by designated person are deprived of their resources and the usage of the resources.

In this context, the concern of the policymakers in Pakistan appeared to be that all deadlines had already expired with FATF calling upon Pakistan to meet its obligations by fully implementing the action plan, and a failure in the context might lead to crashing of business and other relations with member countries. It was in this backdrop that the government in order to allay the fears of FATF resorted to amendments in the Anti-Terrorism Act; the Anti-Money Laundering (Second Amendment) Bill; and the Islamabad Capital Territory (ICT) Waqf Properties Bill.

The question in this respect is whether the mere passage of amendments to the laws will bring any significant change. The other associated issue is of duplication of laws. Pakistan already has laws in place to deal with terror financing and money laundering, such as the Pakistan Penal Code, Criminal Procedure Code, Qanun-e-Shahadat (Law of Evidence), Anti Money Laundering Act 2010, Anti-Terrorism Act 1997, Investigation of Fair Trial Act 2014, Securities and Exchange Commission of Pakistan Act 1997, State Bank, Companies Act 2017, Societies Registration Act 1860, and the likes. But the problem lies in their efficient and effective implementation. Until and unless the capacity of those civilian institutions is enhanced, desired results are difficult to achieve. The powers via amendments to Anti-Terrorism Act carrying provisions that the investigating officer, with the permission of the court, can conduct covert operations to detect terrorism funding, track communications and computer system by applying latest technologies in 60 days are also available in Investigation of Fair Trial Act 2014 but police officials have not been endowed with powers under the rules made therein.

The apprehensions of the opposition and civil society are that many of the provisions are essentially against the fundamental rights and liberties. They are also critical of the role given to NAB and other such institutions, which may use these arbitrary powers for political engineering. Another area of concern for opposition is the insertion of the provision empowering the government to notify a National Executive Committee. In all probability, besides others, the committee is likely to be composed of NAB and intelligence agencies. In the past, persons like Dr Asim had been grilled using powers under anti-terrorism but later on he was charged for corruption. Similarly, the experiences of forming JITs, while inquiring into the Panama cases, have also not gone well.

Legislation, that has national and international ramifications, should always be done with national consensus after ensuring that all stakeholders are onboard.

Published in The Express Tribune, September 23^rd, 2020.

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