The government has proposed that the fiscal offences, including serious tax crimes/tax evasion would be brought into the ambit of money-laundering under the proposed amendments to the Anti-Money Laundering Act (AMLA). Syed Mansoor Ali of Financial Monitoring Unit (FMU), State Bank of Pakistan, informed the Senate Standing Committee on Finance here on Wednesday that at present taxation offences are not considered as money laundering offences under the existing law.
An enabling provision has been proposed in the Anti-Money Laundering Act to include serious offences of taxation into the money laundering regime. Through proposed amendments to the anti-money laundering laws the government wants to facilitate the law enforcement agencies to carry out their functions smoothly. Moreover, a new clause has been added requiring all reporting agencies to ensure customers due diligence. It would be standard obligation on financial institutions to do customers due diligence.
He added the amendments proposed to the Anti Money Laundering Act, 2010 reflect the government's firm resolve to take expeditious measures to strengthen its anti-money laundering regime. These amendments are aimed at streamlining the existing law to bring them in line with international standards prescribed by Financial Action Task Force (FATF); and to bring consistency and clarity in the enforcement provisions. These amendments would help the government to ensure that the proceeds of crimes and property involved in money laundering are detected, investigated and prosecuted effectively.
Sharing data of the STRs, Syed Mansoor Ali said that from 2004, 5,775 STRs have been reported to the financial monitoring unit. Out of this 350, STRs have been forwarded to Federal Investigation Agency (FIA), 112 STRs are under investigation, 270 persons have been arrested and 200 accounts frozen and 75 STRs were forwarded to the NAB for investigation.
Strongly reacting to the proposed amendments, Senator Saleem Mandviwalla said that there is no justification to include tax evasion within the purview of money laundering. The Federal Board of Revenue (FBR) has its own comprehensive tax laws to deal with the fiscal offences like tax evasion. The proposed law would take taxpayers into the regime of money laundering. It could be best international practice, but I strongly oppose any such move of the government to bring taxpayers within the purview of money laundering. Senators Kulsoom Parveen and Sardar Fateh Muhammad also opposed the government's move to bring the fiscal offences within the money laundering regime.
Secretary Ministry of Finance Dr Waqar Masood Khan informed the committee that some people are involved in tax evasion and later the same money is laundered. On one hand, tax evasion has been committed and the evaded money is laundered. We are tightening the regime to check money laundering and terror financing.
He further said that Pakistan is not blacklisted by the Financial Action Task Force (FATF) in implementation of the international standards regarding anti-money laundering regime.
He admitted that the weak area is the capacity building and training of officers in terrorist financing. Under the National Action Plan, Cells are being established in all four provinces for training of police officers on the subject of terrorist financing. These trained police officers would be able to prosecute terrorists involved in terrorist financing.
He informed the Senate Standing Committee on Finance that the Financial Monitoring Unit (FMU) situated at State Bank of Pakistan (SBP), Karachi is the central processing unit which keeps eye on the banking transactions to check money laundering and terror financing.
He said the FATF has become a very important institution for implementation of the anti-money laundering regime. The government does not want to include Pakistan in the list of countries where anti-money laundering regime is not fully enforced. State Bank of Pakistan Governor Ashraf Mahmood Wathra informed the committee that SBP has issued guidelines/circular to the banks regarding suspicious transactions reports and Currency Transaction Reports (CTRs) under the existing laws. The SBP has also guidelines for banks on the reporting of Suspicious Transaction Reports (STRs)/Currency Transaction Reports (CTRs) to Financial Monitoring Unit (FMU) Under AML Act, 2010.
The inspection teams of the SBP capture such banking transactions which are suspicious, but not reported by the banks. President HBL said that we have to report the STRs within a period of seven days to the financial monitoring unit. The bank has a compliance department to monitor the STRs and CTRs at central level and branch level. Banks internally review the STRs and CTRs.
The CEO of Bank Alfalah said globally restrictions on the movement of money are increasing. The SBP has placed rules and regulations to effectively check money laundering on the pattern of international best practices. We have to carry out extra due diligence of some categories of customers. He further said the bank has no problem with the Act but has some procedural issues regarding its execution and these have been taken up with the regulator.
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