Tightening terrorism financing laws

International community will brook no flow of funds for financing of terrorist activities. According to reliable sources, Pakistan government after making some efforts which were not fully acceptable to the concerned watchdog abroad, has finally decided to enact laws relating to terrorism financing more stringently, fearing that any delay in this regard could lead to financial sanctions on the country. Financial Action Task Force (FATF), which is an apex body that sets and monitors the international standards on Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) has already blacklisted Pakistan because of certain lacunae in terrorist financing laws.
It may be recalled that Pakistan's regime on AML and CFT was jointly evaluated by the World Bank and the Asia Pacific Group in 2009, and in view of their recommendations Pakistan had taken a number of steps to make the relevant laws more effective. This was done because earlier in February, 2008 Pakistan was placed by FATF in its Public Statement (commonly known as "black list") due to inadequate progress towards addressing AML/CFT deficiencies. In June, 2011, Pakistan made a commitment with FATF to address AML/CFT deficiencies and as a consequence Pakistan was removed from the Public Statement. However, FATF reviewed Pakistan's progress in February this year and placed it again on the Public Statement because of deficiencies in the system. In order to comply with the international standards, Pakistan government finally decided to constitute a working group to draft the required amendments in the relevant laws which has now prepared Anti-Terrorism (Amendment Bill) 2012. The draft of the bill is also reported to have been vetted by the Ministry of Law and Justice.
As expected, the latest Bill is reported to aim at addressing shortcomings relating to terrorism financing provisions in the Anti-Terrorism Act, 1997. In particular, the bill would seek to strengthen the provisions relating to the offence of terrorism financing; covering all aspects of the offence in the light of international standards and providing for more effective measures for law enforcement agencies to investigate the offence. The provisions on freezing, seizing and forfeiture of property have been strengthened to ensure that the funding of terrorism financing offence is detected in time and seized after due process of law. The Ministry of Interior would submit the Bill alongwith a comparative matrix of old and new provisions of Anti-Terrorism Act to the Federal Cabinet for approval.
There could possibly be no argument against tightening of the AML and CFT laws with a view to ensuring that the scourge of terrorism and money laundering is eliminated altogether or at least reduced to the minimum and the laws of the country are firmly in accordance with the stipulations of FATF so that Pakistan is not placed on the Public Statement again or faces the risk of financial sanctions or censure. The need for tightening the laws relevant in Pakistan is all the more greater and urgent because of a higher degree of threat from the menace to the survival of the state and the way of living of its citizens. Against such a background, it was of vital importance to ensure that the funding of terrorism financing and money laundering was detected in time and seized after due process of law. Hopefully, new provisions on freezing, seizing and forfeiting property and other forms of punishments to offenders stipulated under the Anti-Terrorism (Amendment) Bill, 2012 would discourage the unscrupulous elements involved in such heinous activities and at the same time satisfy the world opinion that Pakistan is doing enough to check the growing evil across the globe. However, while we fully agree with the need and thrust of the envisaged provisions of the Bill, care must be taken to avoid certain pitfalls which are peculiar to the current situation in Pakistan and could be very costly to economy of the country. For instance, undue interference in the flow of home remittances under the rubric of AML/CFT could jeopardize the increasing flow of such remittances to the country through banking channels and force the majority of expatriates once again to resort to informal channels of sending money back home. In fact, even the reversal of present policy of "no questions asked" and immunity from tax laws in this connection could reduce the free flow of home remittances which has lately emerged as a great support to country's external sector. Similarly, an invasive probing of bank accounts of various categories of people, most of whom have a track record by now of receiving remittances from abroad, could also adversely affect banking sector's deposit mobilisation. Such a risk is very much real because of growing perception in Pakistan that the government bureaucracy assigned to undertake such functions is corrupt and would even try to find faults where there are none. In a situation like this, the level of investment and the prospects of the economy could be greatly impaired if the government is unable to separate the wheat from the chaff and fails to strike a delicate balance between application of these laws to curb money laundering for terror financing and abuse thereof to ensure facilitation of a transition to a vibrant economy.