SBP’s FMU proposes amendments

ISLAMABAD: The Financial Monitoring Unit (FMU) of State Bank of Pakistan (SBP) has proposed dozens of amendments in Anti-Money Laundering Act, 2020 aimed at tightening laws to curb money laundering. Official sources told Business Recorder that Pakistan is required by Financial Action Task Force (FATF) to implement an action plan to bring its financial systems in compliance with international FATF standards on Anti Money Laundering / Countering the Financing of Terrorism (AML/ CFT), Asia Pacific Group, in its Mutual Evaluation Report (MER) on Pakistan has made recommendations on AML/ CFT. In the wake of these developments and after consultations with international consultants, Financial Monitoring Unit (FMU) has proposed amendments in the AML Act, 2010.

The proposed amendments will reflect government’s firm resolve to strengthen its AML regime in the country regime in the country. These amendments are aimed at streamlining the existing AML law in line with international standards prescribed by FATF.

These amendments would identify AML/ CFT regulatory authorities in Pakistan including the regulatory Authority for Designated Non-Financial Businesses and Professions (DNFBPs) and their powers. Functions and powers of AML/ CFT regulatory authorities have been clearly defined with powers to issue licences, regulations and to perform other ancillary functions to comply with the requirements of the provisions of the AML Act. Customers Due Diligence (CDD) process has been explained in detail in the proposed amendments. The offence of money laundering has been proposed to be a cognizable offence. The fine for the offence of money laundering has been proposed from existing up to Rs 5 million to up to Rs 25 million and in case of legal persons the fine may extend to Rs 100 million in place of existing Rs 5 million. The proposed amendments have been thoroughly reviewed by the International Consultants engaged to assist Pakistan in implementation of FATF Action, APG Mutual Evaluation Recommended Actions and other AML/ CFT matters.

Finance Division shared the draft vetted by the Law Division with MNC. The consultants have suggested some amendments in the vetted draft. Subsequently, Finance Division has sent the proposed amendments of MNC for incorporation and further vetting.

The Cabinet Committee on Disposal of Legislative Cases (CCLC) is not functional at present. The vetted draft of 2nd Amendment Bill, 2020 will be placed directly before the Cabinet for its approval.

According to 7D- inability to complete CDD and tipping off; (1) where a reporting entity is unable to complete CDD requirements, it- (a) shall not open the account, commence business relations or perform the transaction, or shall terminate the business relationship if any; and (b) shall considering a suspicious transaction report in relation to the customer; ( 2) where reporting entity forms a suspicion of money laundering or terrorist financing, and reasonably believes that performing the CDD process will tip-off customer, the reporting entity shall not pursue CDD process and shall file Suspicious Transaction Report (STR).

Section 21(2) of the proposed amendments states the court shall not take cognizance of any offence punishable under section 4 except upon a complaint in writing made by the investigating officer or any officer of the federal government or a provincial government authorized in writing in this behalf by the federal government by a general or special order made in this behalf by that government, provided that where the person accused is a reporting entity, the investigating officer or any other authorized officer, as the case may be shall, before filing such complaint, seek i.e. approval of the concerned AML/CFT regulatory authority which shall not withhold its decision for a period exceeding sixty days.

Section 21(3): the court shall not take cognizance of any offence punishable under sub-section (1) of the section 33 except upon a complaint in writing made by the FMU or investigating or prosecuting agency.

A National Executive Committee headed by Prime Minister Advisor on Finance and comprising members, Minister for Foreign Affairs, Minister for Law and Justice, Minister for Interior, Minister for Economic Affairs Division, Governor SBP, Chairman SECP, Director General Military Operations, Director General (C) ISI and Director General, FMU Member/Secretary has been constituted which will meet at least twice a year to make recommendations to the federal government for effective implementation of this Act and framing of a national policy to combat money laundering and financing terrorism. The committee will also make recommendations to the federal government for the determination of offences existing in Pakistan that may be considered to be predicate offences for the purpose of the Act.—MUSHTAQ GHUMMAN