President General Pervez Musharraf on Saturday night promulgated "Anti-Money Laundering Ordinance 2007" to place an effective mechanism for prevention of money laundering, detection of suspicious transactions and combating financing of terrorism.
The government has fulfilled a major demand of the international community for introducing a financial system with legal backing for controlling the menace of money laundering. The clauses of the proposed anti-money laundering bill have been discussed threadbare at different forums including National Assembly Standing Committee on Finance and Revenue.
Under the Ordinance, the government would establish a Financial Monitoring Unit to properly monitor suspected transactions for checking the money laundering in Pakistan. The act of money laundering would be a serious offence punishable under the provisions of the Ordinance.
The investigating or prosecuting agencies including National Accountability Bureau (NAB), Federal Investigation Agency (FIA), Anti-Narcotics Forces (ANF) would be empowered to investigate "predicate offence" (having nexus with money laundering, but does not include fiscal offence.
The Ordinance has specified the role of different government departments, banks, regulatory bodies and investigating agencies for checking movement of illegal funds through the financial systems. The Ordinance has also elaborated the procedure to check the suspicious accounts transactions through the banking system.
ACCORDING TO THE ORDINANCE: it is expedient to provide for prevention of money laundering and forfeiture of property derived from, or involved in, money laundering and for matters connected therewith or incidental thereto.
FOLLOWING IS THE TEXT OF THE ORDINANCE: And Whereas the National Assembly is not in session and the President is satisfied that circumstances exist which render it necessary to take immediate action; Now, Therefore, in exercise of the powers conferred by clause (1) of Article 89 of the Constitution of the Islamic Republic of Pakistan, the President is pleased to make and promulgate the following Ordinance.
1. SHORT TITLE, EXTENT AND COMMENCEMENT:
(1) This Ordinance may be called the Anti-Money Laundering Ordinance, 2007.
(2) It extends to the whole of Pakistan.
(3) This section shall come into force at once and the remaining provisions shall come into force on such date as the Federal Government may, by notification in the official Gazette, appoint.
2. DEFINITIONS: In this Ordinance, unless there is anything repugnant in the subject or context,
(a) "accounts transaction" means any facility or arrangement by which a financial institution does any one or more of the following acts, namely; (i) accepts deposits of currency;(ii) allows withdrawal of currency or transfers into or out of the account; (iii) pays cheques or payment orders drawn on a financial institution or collects cheques or payment orders on behalf of a person; (iv) provides a facility or arrangement for a safety deposit box; (v) wire transfer; or (vi) allows any transaction which has the effect of any debit or credit entry in respect of particular accounts;
(b) "attachment" means prohibition of transfer, conversion, disposition or movement of property by an order issued under section 8;
(c) "CTR" means report on currency transactions exceeding such amount as may be specified by the National Executive Committee;
(d) "Court" means the Court specified under section 20;
(e) "Director General" means the Director General of FMU appointed under section 6;
(f) "financial institutions" means entities licensed or supervised by SBP and non-banking finance companies as defined under the Companies Ordinance, 1984 (XLVII of 1984), and includes a foreign exchange company and a company managing, conducting or supervising a foreman, agent or, in any other capacity, any person or entities which conduct or engage in one or more of the financial activities or business, including insurance, trading in transferable securities and commodity futures trading;
(g) "fiscal offence" means an offence punishable under the Income Tax Ordinance, 2001 (XLIX) of 2001), the Federal Excise, Act, 2005, the Customs Act, 1969 (IV of 1969), the Sales Tax Act, 1990 and any other law as the Federal` government may notify in this behalf;
(h) "FMU" means the Financial Monitoring Unit established under section 6;
(i) "foreign serious offence" means an offence.
(i) against the law of a foreign State stated in a certificate issued by, or on behalf of, the government of that foreign State; and
(ii) which, had it occurred in Pakistan, would have constituted a predicate offence;
(j) "intermediary" means a stock-broker, sub-broker, share transfer agent, banker to an issue, trustee to a trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and any other intermediary associated with securities market and registered under the Securities and Exchanges Commission of Pakistan Act, 1997 (XLII of 1997);
(k) "investigating or prosecuting agency" means the National Accountability Bureau (NAB), Federal Investigation Agency (FIA), Anti-Narcotics Forces (ANF) or any other law enforcement agency as may be notified by the Federal Government for the investigation or prosecution of a predicate offence;
(l) "investigating officer" means the officer nominated or appointed under section 24;
(m) "National Executive Committee" means the National Executive Committee constituted under section 5;
(n) "non-financial business and professions" means real estate agents, jewellers, dealers in precious metals, precious stones, lawyers, notaries and other legal professionals, accountants, trust and company service providers and such other non-financial businesses and professions as may be notified by the Federal Government;
(o) "offence of money laundering" has the meaning as defined in section 3;
(p) "person" means an individual, a firm, an entity, an association or a body of individuals, whether incorporated or not, a company and every other juridical person.
(q) "prescribed" means prescribed by rules made under this Ordinance;
(r) "proceeds of crime" means any property derived or obtained directly or indirectly by any person from the commission of a predicate offence or a foreign serious offence;
(s) "property" means property or assets of any description, whether corporeal or incorporeal, movable or immovable, tangible or intangible, and includes deeds and instruments evidencing title to, or interest in, such property or assets, including cash and monetary instruments, wherever located;
(t) "predicate offence" means an offence specified in the Schedule to this Ordinance having nexus with money laundering, but does not include fiscal offence;
(u) "record" includes the records maintained in the form of books or stored in a computer or any electronic device, or such other form as may be prescribed;
(v) "SBP" means State Bank of Pakistan established under the State Bank of Pakistan Act, 1956 (XXXIII of 1956);
(w) "Schedule" means schedule to this Ordinance;
(x) "SECP" means Securities and Exchange Commission of Pakistan established under the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997);
(y) "Suspicious Transactions Report" means the report on suspicious accounts transactions specified under section 7; and
(z) "transfer" means sale, lease, purchase, mortgage, pledge, gift, loan, or any other form of transfer of right, title, possession or lien.
APP ADDS: 3. Offence of money laundering.- A person shall be guilty of offence of money laundering, if the person:
(a) acquires, converts, possesses or transfers property, knowing or having reason to believe that such property is proceeds of crime; or
(b) renders assistance to another person for the acquisition, conversion, possession or transfer of, or for concealing or disguising the true nature, origin, location, disposition, movement or ownership of property, knowing or having reason to believe that such property is proceeds of crime.
4. PUNISHMENT FOR MONEY LAUNDERING: Whoever commits the offence of money laundering shall be punishable with rigorous imprisonment for a term which shall not be less than one year but may extend to ten years and shall also be liable to fine which may extend to one million rupees and shall also be liable to forfeiture of property involved in the money laundering.
5. NATIONAL EXECUTIVE COMMITTEE TO COMBAT MONEY LAUNDERING: (1) Within thirty days of the commencement of this Ordinance the Federal Government shall, by notification in the official Gazette, constitute a committee to be known as the National Executive Committee which shall consist of the following members, namely:
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(a) Minister for Finance or Advisor to the Prime Minister on Finance-Chairman
(b) Senior Advisor to the Prime Minister on Foreign Affairs, Law, Justice,and
Human Rights Member
(c) Minister for Law and
Justice Member
(d) Minister for Interior Member
(e) Governor SBP Member
(f) Chairman SECP Member
(g) Director General Member
(h) fany other Member to be nominated by the Federal Government.
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(2) The Director General shall also act as Secretary of the National Executive Committee.
(3) THE NATIONAL EXECUTIVE COMMITTEE SHALL:
(a) meet regularly to develop, co-ordinate and publish an annual national strategy to fight money laundering;
(b) determine offences existing in Pakistan that may be considered to be predicate offences for the purposes of this Ordinance;
(c) provide guidance and sanction in framing of rules and regulations under this Ordinance;
(d) make recommendations to the Federal Government for effective implementation of this Ordinance and framing of national policy to combat money laundering;
(e) issue necessary directions to the agencies involved in the implementation and administration of this Ordinance;
(f) discuss any other issue of national importance relating to money laundering: and
(g) undertake and perform such other functions as assigned to it by the Federal Government, relating to money laundering.
(4) The National Executive Committee shall be assisted by a General Committee to be composed of:
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(a) Secretary Finance Chairman
(b) Secretary Interior Member
(c) Secretary Foreign Affairs Member
(d) Secretary Law Member
(e) Governor SBP Member
(f) Chairman SECP Member
(g) Director General Member
(h) any other Member to be nominated by the Federal Government
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(5) The Director General shall also act as Secretary of the General Committee.
(6) The General Committee may invite any person to participate in the meeting as it deems necessary.
(7) THE GENERAL COMMITTEE SHALL, INTER ALIA: (a) take measures as necessary for development and review of performance of investigating agencies, FMU and the financial institutions and non-financial businesses and professions, relating to anti-money laundering;
(b) review training programs for Government, financial institutions, non- financial businesses and professions and other persons, relating to anti money laundering;
(c) provide necessary assistance to the National Executive Committee in carrying out its functions and duties under this Ordinance;
(d) discuss any other issue of national importance relating to money laundering: and
(e) undertake and perform such other functions as assigned to it by the National Executive Committee.
6. FINANCIAL MONITORING UNIT: (1) The Federal Government shall, by notification in the Official Gazette, establish a Financial Monitoring Unit which shall be housed in SBP or at any other place in Pakistan.
(2) The FMU shall have independent decision making authority on day-to- day matters coming within its areas of responsibility.
(3) A Director General who shall be a financial sector specialist who shall be appointed by the Federal Government in consultation with SBP to head FMU and exercise all powers and functions of the FMU subject to the supervision and control of the General Committee.
(4) The FMU shall exercise the following powers and perform the following functions, namely:-
(a) to receive Suspicious Transactions Reports and CTRs from financial institutions and such non-financial businesses and professions as may be necessary to accomplish the objects of this Ordinance;
(b) to analyse the Suspicious Transaction Reports and CTRs and in that respect the FMU may call for record and information from any agency in Pakistan (with the exception of income tax information) concerning the person in question. All such agencies shall be required to promptly provide the requested information;
(c) to disseminate, after having considered the reports and having reasonable grounds to suspect, the Suspicious Transaction Reports and any necessary information to the investigating agencies concerned as described in clause (k) of section 2;
(d) to create and maintain a data base of all Suspicious Transaction Reports and CTRs, related information and such other materials as the Director General determines are relevant to the work of the FMU and in that respect, the FMU is authorised to establish necessary analytic software and computer equipment to effectively search the data base, sort and retrieve information and perform real time linkages with databases of other agencies both in and outside Pakistan as may be required from time to time;
(e) to co-operate with financial intelligence units and appropriate law enforcement authorities in other countries and to share and request information and documents;
(f) to represent Pakistan at all international and regional organisations and groupings of financial intelligence units and other international groups and forums which address the offence of money laundering and other related matters;
(g) to submit to the National Executive Committee an annual report containing recommendations based upon necessary information and statistics regarding countermeasures which can be taken to combat money laundering and such reports shall provide an overall analysis and evaluation of the Suspicious Transaction reports limited to details of the investigations and prosecutions that have been or are being conducted in relation to the offence of money laundering in Pakistan;
(h) to frame regulations in consultation with SECP for ensuring receipt of Suspicious Transaction Reports and CTRs from the financial institutions and non-financial businesses and professions with the approval of the National Executive Committee;
(i) to engage a financial institution or an intermediary or such other non-financial businesses and professions or any of its officers as may be necessary for facilitating implementation of the provisions of this Ordinance, the rules or regulations made hereunder; and
(j) to perform all such functions and exercise all such powers as are necessary for, or ancillary to, the attainment of the objects of this Ordinance.
(5) Subject to the regulations sanctioned by the National Executive Committee in this behalf, the Director-General may, if there appear to be reasonable grounds to believe that any property is involved in money laundering, order freezing of such property, for a maximum period of fifteen days, in any manner that he may deem fit in the circumstances.
7. PROCEDURE AND MANNER OF FURNISHING INFORMATION BY THE FINANCIAL INSTITUTIONS: (1) Every financial institution shall file with the FMU, to the extent and in the manner prescribed by the FMU, Suspicious Transaction Report conducted or attempted by, at or through that financial institution if the financial institution knows, suspects, or has reason to suspect that the transaction (or a pattern of transactions of which the transaction is a part):
(a) involves funds derived from illegal activities or is intended or conducted in order to hide or disguise proceeds of crime;
(b) is designed to evade any requirements of this section; or
(c) has no apparent lawful purpose after examining the available facts, including the background and possible purpose of the transaction:
Provided that Suspicious Transaction Report shall be filed by the financial institution with the FMU immediately, but not later than seven working days after forming that suspicion.
(2) All CTRs shall, to the extent and in the manner prescribed by the FMU, be filed by the financial institutions with the FMU immediately, but not later than seven working days, after the respective currency transaction.
(3) Every financial institution shall keep and maintain a record of all Suspicious Transactions Reports and CTRs filed by it for a period of five years subsequent to termination of its business relationship with the particular client whose transaction was reported by it under sub-sections (l)and(2).
(4) The provisions of this section shall have effect notwithstanding any obligation as to secrecy or other restriction on the disclosure of information imposed by any other law or written document.
(5) Notwithstanding anything contained in any other law for the time being in force, any Suspicious Transactions Reports required to be submitted by any person or entity to any investigating and prosecuting agencies shall, on the commencement of this Ordinance, be solely and exclusively submitted to FMU to the exclusion of all others.
8. ATTACHMENT OF PROPERTY INVOLVED IN MONEY LAUNDERING: (1) The investigating officer may, on the basis of the report in his possession received from the concerned investigating agency, by order in writing, with prior permission of the Court, provisionally attach property, which he reasonably believes to be proceeds of crime or involved in money laundering for a period not exceeding ninety days from the date of the order.
(2) The investigating officer shall within forty-eight hours immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the head of the concerned investigating agency, in a sealed envelope, in the manner as may be prescribed, and the concerned investigating agency, shall keep such order and material for such period as may be prescribed.
(3) Every order of attachment made under sub-section (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of the finding made under sub-section (2) of section 9 whichever is earlier.
(4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section
(1) FROM SUCH ENJOYMENT: EXPLANATION: For the purposes of this sub-section, "person interested", in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property.
(5) The investigating officer who provisionally attaches any property under sub-section (1) shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before the Court.
9. INVESTIGATION: (1) The investigating officer shall, not later than , seven days from the date of order of attachment made under sub-section (1) of section 8 or, seizure of property under section 14 or section 15, serve a notice of not less than thirty days on the person concerned.
The notice shall call upon such person to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 8, or, seized under section 14 or section 15, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money laundering and forfeited by the Federal Government:
Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served upon all persons holding such property.
(2) THE INVESTIGATING OFFICER SHALL, AFTER: (a) considering the reply, if any, to the notice issued under sub section (1);
(b) hearing the aggrieved person; and
(c) taking into account all relevant materials placed on record before him; record a finding whether all or any other properties referred to in the notice issued under sub-section (1) are involved in money laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money laundering.
(3) Where the investigating officer on the basis of report received from the concerned investigating agency decides under sub-section (2) that any property is involved in money laundering, he shall, apply to the Court for an order confirming the attachment of the property made under subsection (1) of section 8 or retention of property or record seized under section 14 or section 15. Such attachment or retention of the seized property or record shall-
(a) continue during the pendency of the proceedings relating to any predicate offence or money laundering before a court; and
(b) become final if it is proved in the court that the property is proceeds of crime or involved in money laundering and order of such court becomes final.
(4) Where the provisional order of attachment made under sub-section (1) of section 8 has been confirmed under sub-section
(3), the investigating officer shall forthwith take possession of the attached property: Provided that where the property seized is perishable in nature or subject to speedy and natural decay, or when the expense of keeping it in custody is likely to exceed its value, the Court may, on the application of the investigating officer, order immediate sale of the property in any manner deemed appropriate in the circumstances.