Anti-money Laundering: Govt agrees to whittle down fiscal crimes list

Ministry of Finance signals willingness to reduce tax crimes list from 26 to nine

Our Correspondent October 03, 2015
The government lacks majority in the upper house of the Parliament and is dependent on other political parties for smooth sailing of legislative business. PHOTO: FILE


In its desperate efforts to get the amended Anti-money Laundering (AML) Bill passed from the Senate, the government on Friday agreed to exclude many proposed tax offences from the list of fiscal crimes that will be dealt under the AML law.

The Ministry of Finance unveiled its revised list of predicate offences in a meeting of Senate Standing Committee on Finance, limiting the fiscal offence to be dealt under AML to only tax frauds, forgery and obstruction in official tax related work. The amendments are proposed in the 2010 Act of the AML.

It had originally proposed to add 26 tax crimes, notably non-filing of income tax returns, as a predicate offence, which should be dealt under the AML regime. The Ministry of Finance and Revenue agreed to reduce the number of crimes to nine in the light of standing committee suggestions, said Finance Secretary Dr Waqar Masood.

Despite conceding significant grounds to the opposition parties, mainly Pakistan Peoples’ Party (PPP), the committee again refused to clear the Bill until the government excludes the fiscal offence from the proposed amendments.

The government lacks majority in the upper house of Parliament and is dependent on other political parties for smooth sailing of legislative business.

Headed by PPP Senator Saleem Mandviwalla, the committee proposed to the government that the tax frauds related to foreign assets should be covered under the AML. “The laws already exist to cover the tax crimes committed in Pakistan”, said Mandviwalla.

In order to fulfil commitments with the Financial Action Task Force (FATF) and International Monetary Fund (IMF), the government wants to include the fiscal offences in the AML regime.

Dr Masood said that all around the world, corruption proceeds are dealt under the AML regime and Pakistan has to follow this line or else it may face problems at international forums.

The PML-N’s Senator Ayesha Raza Farooq supported the government move to bring corruption under the AML regime.

Mandviwalla said that there were serious repercussions of making the fiscal offence as predicate crime of AML, saying a person punished under the AML cannot even get a visa of a foreign country.

Ministry of Finance Legal Adviser Muneeb Zia said three sections from each of Income Tax Ordinance 2001, Sales Tax Act of 1990 and Federal Excise Act will be dealt under the AML regime.

The Section 192 of Income Tax Ordinance that deals with the prosecution for submission of false
tax statement, section 194 - prosecution for improper use of National Tax Number and section 196 -prosecution for obstructing income tax authority from official work, will be dealt under the AML regime.


The standing committee also deferred voting on proposed amendments in the State Bank of Pakistan Act of 1956.

The government has proposed amendments aimed at meeting a condition of the IMF programme. The IMF seeks greater autonomy for the central bank and wants to take it out of clutches of the Finance Ministry.

One of the significant amendments is to withdraw the powers of the Board of the SBP to approve the monetary policy and give these powers to a ten-member Monetary Policy Committee.

The standing committee had objections over the composition of the MP committee.

The government has proposed that out of ten, four members will be among the directors of the central bank board, four officials of the SBP and two independent economists.

“The exercise appears cosmetic and despite constitution of the MP committee, the powers to make the monetary policy will still be exercised by the government”, observed Mandviwalla.

Counterfeit currency

The SBP Deputy Governor Riaz Riazuddin, gave a briefing on measures taken by the central bank to control counterfeit currency.

He said the banks have been asked to install automatic cash processing machines by January 2017.

From year 2017, only machine-processed notes will be distributed at bank,” he added.

The standing committee members expressed concerns about circulation of counterfeit currency notes, saying its incidences have been increasing with no effective mechanism to check fake notes

Published in The Express Tribune, October 3rd, 2015.

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