Monday, April 19, 2021

Pakistan: 10 years imprisonment, Rs5m penalty proposed to curb money laundering


The federal government has proposed even more harsh punishments to curb money laundering, hundi, hawala and other illegal foreign exchange transactions in the country.

Up to 10 years of rigorous imprisonment and a penalty of Rs5 million has been proposed under the Anti-Money Laundering (Amendment) Bill, 2019. Besides this, an investigating officer will have the power to arrest anybody and attach suspicious property for one year on court orders.

Officials of the Ministry of Finance introduced the Anti-Money Laundering (Amendment) Bill, 2019 at the meeting of the National Assembly’s Standing Committee on Finance Revenue and Economic Affairs on Thursday. It was strongly opposed by the opposition.

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In the original law, the imprisonment for a money laundering offence is in the range of minimum one year to a maximum of 10 years while the limit of a fine is restricted to Rs1 million.

Under the proposed amendments, the Financial Monitoring Unit (FMU) is now bound to report suspicious bank transactions immediately instead of the earlier time of seven working days.

Every reporting entity shall keep and maintain all record related to Suspicious Transaction Reports and CTRs filed by it for a period of at least 10 years, according to the amendments. In the original law, this time limit was reduced to five years only.

The government has proposed enhancing the limit of attachment of property involved in money laundering from 90 days to 180 days and up to one year. The investigation officer has also been given more powers to arrest anybody.

“(1) An investigating officer authorised under subsection (2) of Section 24, having on the basis of material in his possession, reason to believe (reason for such belief to be recorded in writing) that any person has been guilty of an offense punishable under this Act, he may arrest such person and shall, an soon as may be, inform him of the grounds for such arrest,” reads the proposal.

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“The world is moving towards de-regulations while in Pakistan, the PTI government is introducing and adopting the typical old methods by giving more powers to FIA and other agencies of raids and arrests to harass and suppress businessmen and its opponents,” said Hina Rabbani Khar, a member of the finance committee while talking to SAMAA TV.

Under the proposed law, punishment up to five years imprisonment and a fine of Rs2 million has also been proposed for the concerned officers involved in violation of the relevant laws or failing to file a suspicious transactions report and or for providing false information.

The committee also considered the Foreign Exchange Regulation (Amendment) Bill, 2019. The State Bank of Pakistan demanded more powers to regulate the movement of foreign currency within Pakistan.

“Except as may otherwise be directed by the State Bank, any person shall be free to move or transfer foreign currency, physically or otherwise, within Pakistan,” the amendment reads.

“There are little chances of curbing money laundering or hawala and hundi through these extra powers. Instead, it will pave the way for more corruption,” said Qaiser Ahmed Sheikh, another member of the committee.

State Bank officials, while briefing the committee, said that various stakeholders, including the FIA have been approaching the SBP to enhance the punishment provided in this Section from 2 years to 5 years in order to curb illegal hawala and hundi.

SBP has also endorsed this enhancement in punishment in view of the increase in foreign exchange violations. It would become very difficult for people to carry money or currency within the country if these amendments are passed, said the committee members.

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The committee expressed serious reservations on the amendments to both bills. It called PM’s Adviser on Finance Dr Hafeez Shaikh, the finance secretary and a State Bank of Pakistan representative to the next meeting for further explanation.


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