Three bills down

September 27, 2020

After much effort and despite an uproar in the legislature, the government has passed three controversial bills, ahead of the FATF meeting, aiming to curb money laundering and terrorism financing

After a month of efforts, the government has succeeded in passing bills required ahead of the FATF (Financial Action Task Force) meeting, introducing new filters to curb money laundering.

The three anti money-laundering bills were passed in a joint session of the parliament amid criticism by opposition parties on political and technical grounds. The government is hoping that the passage of new laws will help the country avoid the FATF blacklist and severe financial sanctions at the upcoming FATF meeting scheduled next month. Pakistan has been trying to get off the FATF grey list by taking recommended actions to curb money laundering and stop financing channels used by banned organisations.

Over the last few months, Pakistan has amended nearly a dozen laws as part of the efforts. Earlier this year, the FATF gave Pakistan a 27-point action plan to get a clean chit and becoming a country not suspected of terror financing. After the recent legislation in this vein, the federal government appears confident that it has taken the necessary legislative steps ahead of the meeting. The FATF had placed Pakistan on its grey list in June 2018 and urged it to implement the action plan by the end of 2019. Later, the deadline was extended because of the Covid-19 pandemic and delays in meeting the requirements.

The Anti-Money Laundering (Second Amendment) Bill, 2020, aims to streamline the existing anti-money laundering law in line with international standards prescribed by the FATF. The Anti-Terrorism (Third Amendment) Bill, 2020, is aimed at controlling terror financing. Another bill introduces improvised investigation techniques and allows undercover operations, interception of communication and access to computer systems with the permission of a competent court. Earlier, Pakistan had also issued a consolidated list of sanctioned individuals and entities, including known leaders and members of banned terrorist groups.

The new bills have provisions relating to action against unlicensed money changers. They provide punishments for money laundering including smuggling and illegal trading of currencies, which can be up to a prison term of 10 years. The laws are expected to stop smuggling of currencies, ban illegal trading and would bring a significant change in the markets, according to several foreign exchange dealers. These legislative steps, they say, can also help establish a stable exchange rate market based on true valuation of currencies. Some analysts say these will also result in an increase in legal remittances foreign exchange would come only through legal channels.

Notably, however, the opposition parties rejected all three FATF-related bills on political grounds. The Senate, where the opposition has a majority, did not pass the bills. This compelled the government to call an emergency joint session of the parliament to get the bills passed before the next FATF meeting. The opposition parties proposed certain amendments to the accountability mechanisms to address their reservations on the ongoing accountability drive which they allege to be “politically motivated”.

The ruling party accused the Opposition leaders of watching their own personal interests rather than serving the national interest. Raza Rabbani, a Pakistan Peoples Party senator and a former chairman of the Upper House, answered this criticism by the ruling alliance, saying a careful reading of the new anti-money-laundering bill shows “an attempt to make the entire nation an informer.” He claimed the Anti- Money Laundering (Second Amendment) Bill, 2020, motivated people to take on the role of informants, and gives the authorities the powers of arrest without warrants.

Advisor to Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh chaired a meeting of the National Executive Committee (NEC) on Anti- Money Laundering last week and discussed the progress on the FATF Action plan. He said Pakistan had amended 15 laws, addressing the shortcomings in accordance with FATF and APG recommendations. The meeting also discussed the guidelines for improving the capacity of the law enforcement agencies in carrying out investigations and prosecution in money-laundering cases.

The writer is a staff reporter. He can be reached at [email protected]

Three bills down