Incoming and outgoing international passengers: declaration of currency in hand may be made mandatory

Syed Mansoor Ali, Senior Joint Director Financial Monitoring Unit (FMU) of the State Bank of Pakistan hinted at the possibility of amendment to the Protection of Economic Reforms Act, 1992, making it mandatory for incoming and out-going international passengers to declare the currency in hand for plugging money laundering.
The Anti-Money Laundering Law would make it compulsory for jewellers and real estate brokers to record the suspicious transactions above Rs 2.5 million with the Financial Monitoring Unit (FMU) of the State Bank of Pakistan (SBP).
During question-answer session on 'Money Laundering and Implications for Counter Terrorism' moot organised by Pakistan Institute of Legislative Development and Transparency (Pildat) on Tuesday, Syed Mansoor Ali said that presently SBP has placed no bar on the passengers to declare the amount of currency at the time of arrival or departure.
The law would be instrumental in checking money laundering for which the government is considering options to amend the Protection of Economic Reforms Act, 1992 as the Act has liberal provision for passengers and foreign currency accountholders. Responding to a query, Joint Director FMU of the State Bank said that the government under the long-term strategy would make it necessary for the jewellers and real estate brokers to report all transactions. Whenever any jeweller/real estate agent is suspected of involvement in over Rs 2.5 million transaction, he will be have to report it in the next two to five years. Keeping this in view, the definition of "non-financial businesses and professions" covers real estate agents and jewellers.
While highlighting role of the anti-Money Laundering Law, he said presently cash transactions involving over Rs 2.5 million has to be reported to the FMU of the SBP. The limit of over Rs 2.5 million as threshold for reporting suspicious transactions is high which needs to be brought down. The limit of over Rs 2.5 million has now been set keeping in view cash based economy in the country. Under the anti-money laundering law, all the financial institutions operating under the purview of the SBP and the Securities and Exchange Commission of Pakistan (SECP) have to report the suspicious transactions above the said threshold.
Referring to the law enforcement agencies, he said that the FBR Customs Intelligence has been included in the list of law enforcement agencies for investigation. The FMU receives thousands of "CTR" ie report currency transactions, but all of them are not suspicious transactions. When we receive any suspicious transaction, the FMU of the SBP analyse the history of account, counterparty information and other relevant data. For example, if a suspicious transaction has been carried out by a trader, it would be analysed whether the trader has conducted business with other trader or similar kind of transaction has been conducted in the past. If necessary, the FMU of the SBP will collect information from other organisations or institutions as allowed under the law. Similarly, the information is also tallied with the database of the SBP. If the case needs further investigation, it would be referred to the concerned law enforcement agencies.
Sharing key features of the anti-money laundering law, he said that a person shall be guilty of offence of money laundering, if he acquires, converts, possesses, uses or transfers property, knowing or having reason to believe that such property proceeds are criminal; conceals or disguises the true nature, origin, location, disposition, movement or ownership of property; knowing or having reason to believe that such property has proceeds of crime; holds or possesses on behalf of any other person any property knowing or having reason to believe that such property is proceeds' of crime; or participates in, associates, conspires to commit, attempts to commit, aids, abets, facilitates, or counsels the commission of specified acts.
About the role of reporting entities, Senior Joint Director FMU of the SBP said that the reporting entities included Financial Institutions (FI) and non -financial businesses and professions (DNFBP). The financial institution are banks, DFIs, modarabas, insurance, NBFCs, securities broker, exchange companies etc and designated non-financial businesses and profession have not yet been mandated to report STR/CTR. The reporting entities are supposed to file suspicious transactions report (STR) to the FMU within seven days. The reporting entity shall keep and maintain all records for all the STR and CTR ie report on currency transactions reported by them for at least five years after reporting; focus on high risk customers, products, delivery channels, etc.
About the role of the regulatory bodies, he said that the both the regulators ie SBP and SECP have sufficient supervisory powers as they have issued regulations on 'Customer Due Diligence'. The SBP needs to bring improvements in its regulatory ambit over exchange companies, whereas the SECP needs to focus more on stock exchanges/brokers, capacity building of reporting entities to detect and report suspicious transactions.
A leading lawyer and Executive Director PILDAT Ahmed Bilal Sufi informed the conference that tax evasion is not covered under the definition of money laundering. It is a fiscal offence, which is separate from the money laundering. Such cases related to tax are covered under the provisions of the Income Tax Ordinance 2001. Therefore, the fiscal offence should not be confused with the money laundering cases.
He said that the banks in private sector have started implementing the anti-money laundering laws. Bankers are trained to monitor the abnormal transactions after enforcement of the new anti-money laundering law.
He highlighted that the prosecutors are not well trained to deal with the cases of money laundering. Due to lack of training and capacity building issues, the government has not detected any high profile cases of money laundering. Referring to inherited definitions in the law, he said that there are deficiencies in the areas of mutual legal assistance to deal with cases of money laundering.
Ahmed Bilal Sufi said that the money laundering is a difficult crime to be established by the concerned authorities. If it is assumed that India is financing terrorism in Balochistan, if this is true the trail of the monetary transactions needs to be traced.
If domestic anti-money laundering laws are not effectively implemented, the relevant international agencies would pressurise the government to do the needful. He said that the sub-committees of the Security Council seriously monitor the performance of the Pakistani authorities as far as implementation of the Financial Action Task Force on Money Laundering (FATF) recommendations are concerned.