National Assembly Standing Committee on Finance has put off the approval of the proposed AML amendment law with directives to the Finance Ministry to include deterrence in the law to prevent misuse of arrest powers by the investigating officer (IO)/agency.
"We are giving last chance to the Finance Ministry to make amendment in the proposed law to the satisfaction of the committee members and bring it to the next meeting for consideration," said Asad Umar who presided over the meeting of finance committee of the National Assembly.
The members one after another, from opposition and treasury in the committee, voiced their concerns over proposed powers to the investigation agency/ IO in the AML (Amendment) Bill, 2019 and expressed apprehension about their misuse in the country's overall environment. Previously, arrest of any person suspected to be involved in the offence was subject to the warrants from the court. Now the investigation officer does not need warrants from the court to arrest a person who is suspected guilty of an offence under the law.
The members of the committee opposed, what they termed, the unlimited powers to the investigating officer or agency and proposed that the arrest must be subject to the court permission.
The additional secretary finance argued that Pakistan is on grey list and requires stringent measure to satisfy the FATF with regard to anti-money laundering steps for removal from the grey list. The meeting was informed that multiple agencies would be involved from FIA to NAB and ANF to CTD.
As the discussion progressed on the issue, Finance Ministry was reminded by the members that it has not done any thing during the last one-and-a-half month to improve the law because same objection was raised by the members in the last committee meetings.
The chairman of the committee stated that members are not comfortable with the law and if the government wants it passage from the committee, it should bring some deterrence against the misuse of the authority by the agency or investigating officer.
The proposed amendment in the law also included increase in punishment from one million rupees to five million rupees for money laundering and imprisonment was increased to ten years.
The Finance Ministry said that set procedure was followed for the appointment of the governor State Bank of Pakistan; however, the committee sought in wiring the prescribed procedure for the appointment of the SBP governor and the procedure followed in the last appointment.
Chairman Federal Board of Revenue (FBR) Shabbar Zaidi reiterated that there would be no extension in the asset declaration scheme beyond June 30, 2019, and Chairman of the committee stated that amnesty scheme may not be continued because the International Monetary Fund (IMF) programme is starting after July 3, 2019.
"We have no revenue target for the amnesty scheme and it is a way of transition to the Benami Law," he said. He added that as per their assessment, around 25-30 percent assets are not at the names of actual owners and government has now databank.
The committee also deferred the Foreign Exchange Regulation (Amendment) Bill, 2019 and directed the Finance Division to suggest a threshold for inland movement of money.
The committee recommended to the SBP for preparing comprehensive presentation on the implementation procedure of the bill before enactment by the Parliament. The members were also of the concern that quantum of the foreign currency should be defined in the Bill.
While considering the Foreign Exchange Regulation (Amendment) Bill, 2019, senior director State Bank of Pakistan (SBP) informed the committee that foreign exchange policy and operations in Pakistan are governed under the provisions of Foreign Exchange Regulation Act (FERA), 1947, which empowers the SBP to regulate inflows and outflows the foreign exchange.
However, the SBP does not have explicit powers under FERA, 1947 to issue any regulation/instruction relating to the inland movement of foreign currencies.
Moulana Abdul Akbar Chitrali briefed the committee about the salient features of the Eradication of Riba Bill, 2019. Director SBP Samar Hasnain informed the committee that in order to Islamize the financial system of Pakistan, significant efforts were made during 1980s, Shariah Complaint Banking system was adopted by the SBP in 2002, wherein, both the Islamic and conventional banks were allowed to operate simultaneously in the country.
He added that in terms of share, Islamic banking industry has 13.5 percent and 15.5 percent shares in country's overall banking industry's assets and deposits, respectively.
After threadbare deliberation, the committee recommended to SBP for providing comprehensive plan on the subject bill in the light of the discussion made in the previous meetings of the committee in this regard.
The committee considered the Islamabad Capital Territory Prohibition of Interest on Private Loans Bill, 2019, and decided that briefing on microfinance institutions will be arranged in this regard.
The committee discussed the matter regarding appointments of governor SBP and chairman Federal Board of Revenue.
An in-camera session of the meeting was held to discuss the International Monetary Fund (IMF) staff level agreement and current status of the Financial Action Task Force (FATF).
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