STRs on money-laundering, terror financing increased 20pc this year

ISLAMABAD: The Financial Monitoring Unit (FMU) has informed the government that Suspicious Transactions Reports (STRs) on money laundering and terror financing have gone up by 20 percent in current year.

Now the government concedes that there was need to initiate proceedings and prosecute those involved in crimes of money laundering and terror financing under the existing law of the land, one top official told The News on Wednesday.

The banks and other financial institutions generated around 5,500 STRs in first eight months of the current year 2018 against same levels achieved in last whole year 2017, indicating that the number of STRs had gone by almost 20 percent.

“After holding detailed investigations/analysis by the FMU, they forwarded investigation reports in more than 1,000 cases to concerned law enforcing agencies mostly related to financial frauds, bribery and terror financing for moving ahead against those involved in such crimes in accordance with the law,” top official sources, who attended the National Economic Council (NEC) meeting held under chairmanship of Minister for Finance on Tuesday evening, told The News.

Since its inception in 2007, the FMU had so far received around 23,000 STRs and in last three years the number of STRs generated by banks and other financial institutions had gone up but in last NEC meeting conveyed all law enforcing agencies for proceeding those and made them example in accordance with the existing powers under the law.

The top officials conceded that the amendments into Anti Money Laundering (AML) bill was ready and would be submitted before the cabinet soon after which it would be laid down before the Parliament. The approval of AML amendments and Anti-Terrorism Act (ATA) might take some time so the LEAs have been instructed to move ahead by demonstrating stern actions within the ambit of existing laws and available powers instead of waiting for getting approval into AML and ATA from the Parliament. The regulators such as the State Bank of Pakistan (SBP) were holding inspections in order to bring improvements in the generation of STRs for making this mechanism more effective. On Risk Assessment Framework for terror financing that was approved by the NEC meeting, the DG NACTA informed the high-powered committee about potential risks for terror financing.

According to the salient features of Terror Financing Risk Assessment Report, the terror financing (TF) threats in Pakistan emanate both from foreign and domestic sources. This includes predicate crimes such as cash smuggling, kidnapping for ransom, narco-trafficking, extortion, etc. The potential channels for TF include Hundi/Hawala, unregistered charities, virtual currencies, depending on the corresponding threats and preventive controls. The long and porous borders with Afghanistan and other neighbouring countries provide key pilferage points for terrorism and terrorist financing. Terrorism is also funded externally by hostile intelligence agencies and other anti-state elements.

Different levels of AML/CFT compliance: some sectors are more compliant in frameworks and procedures such as banking, NBFIs, securities, insurance, etc: others require enhancement of supervisory controls or oversight mechanisms. Terrorist Financing Threat (medium) and Terrorist Financing Vulnerability (medium), assesses the National Terrorist Financing risk as ‘medium’ in its assessments.

All these reports will now be shared with the upcoming FATF plenary meeting scheduled to be held at Sydney from January 8 to 10, 2019.

Federal Secretary Finance Arif Ahmed Khan will lead Pakistan’s delegation in upcoming meeting going to be held in Australia and one representative of all concerned agencies and department including SBP, SECP, FBR, FIA, NACTA, CTDs, FMU, NAB and others will be part of the country’s delegation.

To another query, the sources said one camp office of FMU would be established in Islamabad for ensuring effective coordination with other stakeholders but the FMU main office would continue locating into Karachi.