The federal government has reportedly approved an "order" for the provinces about freezing/seizure of assets of entities or individuals in line with United Nations (UN) and Financial Action Task Force (FATF) as the latter had expressed concern over the lack of proper implementation of the assets freeze measures of sanctions regime by Pakistan, well-informed sources Ministry of Foreign Affairs told Business Recorder.
The Chapter VII of the United Nations Charter authorizes the United Nations Security Council, acting under Article 41 of the Charter, to decide measures, not involving the use of armed force, to give effect to its decisions for the maintenance of international peace and security. The implementation of the measures adopted under Chapter VII is obligatory on all UN member states. According to Article 41, these measures, which are commonly known as "sanctions" may include complete or partial interruption of economic relations and or rail, sea, air, postal, telegraphic radio, and other means of communication, and the severance of diplomatic relations.
The sources stated that over the years'''' sanctions mechanism of the United Nations Security Council has evolved. Currently, there are 13 sanctions regimes of the Security Council in force. The implementation of each sanction regime is monitored by a Sanctions Committee. A key measure of these sanction regimes is monitored is "assets freeze" under which States are required to freeze/ seize the assets of designated entities and individuals as soon as they are designated by the relevant Sanctions Committee.
The scope of the assets freeze extends to all forms of assets such as bank accounts and moveable and immovable assets. One such sanction regime which requires States to implement assets freeze measures in the UNSC is 1267 Taliban and Al-Qaida Sanctions regime. Since 2015 the Financial Action Task Force (FATF) has expressed concern over the lack of proper implementation of the assets freeze measures of this Sanctions regime by Pakistan.
"The lack of progress on this issue was a key factor led to Pakistan''''s grey listing by FATF in June 2018. This issue is a major component of the Action Plan which Pakistan is required to implement. Among other aspects relating to this issue, FATF has expressed concern over our legal framework for sanctions implementation," the sources quoted Ministry of Foreign Affairs as saying.
The sources further stated that in Pakistan the decisions of the Security Council, taken under Article 41 of the United Nations Charter are implemented through the United Nations Security Council Act, 1948 (Act No.XIV of 1948). Sanction 2 of the said Act authorizes the federal government to make provision for punishment of person offending against the order.
During discussion at a recent meeting, it was stated that Pakistan has been effectively implementing the assets freeze measures in the financial sector regulated by the State Bank of Pakistan and Securities and Exchange Commission of Pakistan, with regard to freezing of bank accounts etc, the implementation by other authorities regulating immovable and movable assets is lacking. The main reason for this shortcoming is that the authorities at the provincial level do not have clarity on how to implement the SROs issued by the Ministry of Foreign Affairs. This concern has been expressed by provincial governments on a number of occasions.
In order to address this issue and provide clarity to all stakeholders with regards to their obligations for implementing the assets freeze measures, the Ministry of Foreign Affairs had drafted the United Nations Security Council (freezing and seizure) Order, 2018.
The salient features of the Order are as follows: (i) provide definitions of various terms and the scope of assets freeze in line with UN and FATF requirements; (ii) identify the authorized agency for issuing orders as well as the various authorities for implementing the assets freeze/ seizure; (iii) elaborate the procedure to be followed by the implementing authorities freezing/ seizure of assets; (iv) provide for the reporting requirements of the various authorities; (v) provide for the mode of freezing/ seizure of assets i.e. the actions authorities are required to take after they have frozen/ seized the assets; (vi) provide for the rights of bonafide third parties who may be impacted by the assets freeze/ seizure; and (vii) provide for exemptions from assets freeze for meeting basic living expenses in line with UN and FATA requirements.
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