Proposed Benami Transactions Law: Confiscation of property against Federal Legislative List: SBP

State Bank of Pakistan (SBP) has pointed out that confiscation of property in the proposed Benami Transactions Law is against the Federal Legislative List; hence, it should be reconsidered. A copy of an official document available with Business Recorder stated that the SBP commented as per proposed law, if Benami property is confiscated, it will vest in the federal government.
This needs to be reconsidered because Article 172(1) of the Constitution provides: "Any property which has no rightful owner, if located in a province, will vest in the government of that province, and in every other case, in the federal government." The Federal Legislative List and definition of ''property'' provided that power to legislate in respect of property vests in the provinces. The law, therefore, may be reconsidered in consultation with the provinces or Federal Law Ministry.
The SBP stated that the section 18 empowers the authorities under the proposed Act to seek information from any person. This should be subject to any law for secrecy of banking information or unpublished record of the State Bank. While under section 19, the Authority has been given free access to any premises or information at anytime without notice. This should either be subject to warrant and restricted to reasonable time or working hours. Otherwise it may not only be violation of right to privacy as provided under Articles 14 of the Constitution of Pakistan, but the Authorities may also face resistance form semi-literate armed security guards of public or private institutions. The SBP also pointed out that the section 22 of the proposed law does not provide any limitation period. If a Benami transaction is alleged in respect of property acquired for example 20-30 years ago, the owner might have lost all record or proof of payment of consideration, There should be some limitation period for reopening the past transactions.
The regulator stated. "We understand that the Benami Transactions are already prohibited under section 423 of the Pakistan Penal Code, 1860, harmonization whereof with the subject law may be considered."
The section 17 of the proposed Act provides that various authorities including SBP are required to assist the Authorities under the law. There are no provisions as to the cost or extent of assistance. The SBP may assist in providing information available with it or issuing directions to the banks under law. However, it is not clear if SBP officers are called by authorities for assistance in investigation on deputation, who will pay their salaries or other allowance for that period and if they are subsequently called for giving evidence in a case pertaining to their work with Authorities under the Act.