Egmont Group's membership: US not actively taking up Pakistan's case: FMU DG

The United State (US), one of the sponsors of Pakistan for membership of Egmont Group, which combats money laundering and terrorism financing, is not actively taking the Pakistan's case, said Syed Mansoor Ali, Director General of the government's Financial Monitoring Unit (FMU).
"At this stage we could not change sponsor as they could object," said the DG, adding the membership is very important for Pakistan. This he stated while briefing the Senate Standing Committee on Finance, which met here in the chair of Senator Saleem Mandviwalla.
The committee chairman said it was a stigma for Pakistan that it had not got the membership, while countries like Nigeria, Afghanistan and Bangladesh, etc, had the membership. He further said it had been reported that Pakistan was resisting being part of that group.
The DG FMU said Pakistan was following the case vigorously and might get the Egmont Group membership next year. The federal cabinet on 21.09.2011 has permitted for initiating the process of seeking membership of Egmont Group by the Pakistan's Financial Monitoring Unit (FMU) and approved to allow FIUs of USA (FinCEN) and Japan (JAFIC) to sponsor FMU membership. Accordingly, FMU applied for the Egmont Group membership in 2012. As per procedure, the Egmont Co-sponsors ie FinCEN and JAFIC conducted the onsite visit of FMU in November 2012. On the basis of onsite visit report, the Operation Working Group (OWG) of the Egmont Group found FMU meeting the technical requirements of an Financial Intelligence Unit (FIU); however, the Legal Working Group (LWG) of Egmont Group did not clear Pakistan owning to the reasons that FMU cannot freely exchange information with other FIUs as per Egmont Group standards. At that time the AML Law required two tier agreement ie G2G agreement followed by MoU between FMU to share, request and receive information relating to money laundering and financing of terrorism, from counterpart FIU subject to reciprocal arrangements ie MoU between the two FIUs and FMU, accordingly conveyed the amendments to the Co-sponsors (FinCEN & JAFIC) and requested them to resume FMU Egmont Group membership process. FMU has shared all relevant laws, rules & regulations with FinCEN & JAFIC. Response from FinCEN & JAFIC is awaited. Now the case has been prepared and their team may visit in December or January, he added.
In terms of Financial Action Task Force (FATF) Recommendation No. 29 (interpretive note), every FIU is required to seek membership of Egmont Group. The requirement for Egmont membership emanates from the transnational nature of money laundering, terrorist financing and other predicate crimes, which demand sharing of financial intelligence amongst member FIUs, to effectively combat such crimes. Egmont Group was formed by FIUs in 1995. Presently 156 FIUs around the globe are members of the Egmont Group.
According to the working paper submitted to the committee, FMU or local law enforcement agencies are not able to completely analyze or investigate their case wherever financial transactions to/ from foreign jurisdictions are involved. Mostly illicit money emanating form Pakistan, for example due to corruption, organized crimes and other serious crimes, goes out of country. Assets acquired in Pakistan or outside Pakistan through illicit proceeds can be traced on the receipt of intelligence from foreign FIUs/and or sharing of such information with foreign FIUs. Absence of any mechanism/ platform to exchange financial intelligence with other FIUs deprives Pakistan of the opportunity to trace back the suspicious transactions having international dimensions.
The platform of the Egmont membership would help FMU in analyzing the suspicious transactions and tracing the proceeds of crimes, uncovering criminal assets across member countries by following the financial trail, thereby helping FMU and even LEAs in successfully combat the menace of money laundering and terrorist financing.
The committee also considered private member's bill to prohibit the business and practices of private money lending and advancing loans and transactions based on interest (The Islamabad Capital Territory Prohibition of Interest on Private Loans Bill, 2017) moved by Senator Sirajul Haq.
Haq said the injunctions of Islam as laid down in the Holy Quran and Sunnah have explicitly and unequivocally prohibited charging interest on loans and have declared war against those who do not abandon interest.
It is necessary to make a comprehensive legislation on the subject for covering all the aspects of the mischief of private money lending and matters akin thereto. Interest-based loans have badly affected the already poor economic condition of people of Pakistan. Due to private loan transactions, public is molested by the lenders who are unable to pay even principal amount. Lenders continuously harass to recover the amount with multiplied interest amount. This bill seeks to achieve these cited objectives. All the committee members supported the bill.
Earlier, the Finance Ministry had refused to take ownership for the proposed legislation while saying it is not coming under its jurisdiction. But after the Law Ministry's clarification, the Finance Ministry agreed to consider the bill and give its input in 30 days.
The committee also considered the calling attention notice moved by Senator Hidayat Ullah regarding pending approval of 7,500 sanctioned new posts for FATA which have already approved by the FATA Secretariat and the Ministry of SAFRON.
The Finance Ministry responded that no case for creation of 7,500 new posts of FATA Secretariat is pending with Finance Division. it is worth mentioning that earlier under the direction of minister for SAFRON, a meeting was convened which was attended by representatives of SAFRON Division, FATA Secretariat and Finance Division (FA's Organization), and it was decided that the SAFRON Division and FATA Secretariat will jointly work out to rationalize the proposed posts and will send their recommendations to Finance Division for further processing. However, the same has not been furnished to the Finance Division, therefore, no such sanctioned new posts for creation of 7500 posts is pending with Finance Division.
The FATA Secretariat official said that during the period from May 2, 2016 to May 26, 2017, FATA Secretariat submitted sanctioned new posts proposal for creation of 5,544 posts of different categories, involving financial implication of Rs 1,661.240 million per annum, to Finance Division for its attached departments/directorates and educational and health facilities in FATA/FRs The Finance Division conveyed certain observation on these proposals on different occasions, which were formally responded by the FATA Secretariat.
However, the Finance Ministry official said that there is difference over high cost. The committee recommended holding a meeting in 15 days and resolving the matter.
The committee was also briefed on the progress report by the Ministry of Finance on the working papers submitted by the Competition Commission of Pakistan (CCP) to amend its act to enhance revenue.
The Commission carries out its function by prohibiting anti-competitive activities by undertakings, advocating pro-competitive laws and policies, and conducting research on competition issues.
The working paper submitted by Competition Commission of Pakistan suggested that in order for CCP to meet its mandate of ensuring healthy competition in the economy, it is necessary to make it financially sustainable and independent. Section 20 of the Competition Act provides for a percentage of the fee and charges levied by other regulatory agencies in Pakistan as a source of income for CCP to ensure its financial independence. Furthermore, SRO (1)/2008 of the Finance Division requires the five regulatory agencies ie SECP, NEPRA, OGRA, PTA, and PEMRA to pay 3% of their fees to CCP. The opinion of the Law and Justice Division also supports viewpoint of the CCP. Currently, only SECP is paying the prescribed percentage of its fee and charges to the CCP.
The Finance Division after analyzing the proposal submitted by CCP has asked the CCP to complete the necessary consultation with these regulatory bodies before doing the proposed amendments. The consultation process has already started and discussions are underway with these regulatory bodies. The committee decided to prepare a report and get is passed from the Senate in favor of the CCP to make it financially viable.