The Cabinet Committee for Disposal of Legislative Cases (CCLC) headed by Minister for Law and Justice, Barrister Farogh Naseem has finalised amendments in rules and regulations to prevent Hundi/Hawla and illegal foreign exchange transactions, official sources told Business Recorder.
The CCLC was informed that Prime Minister Imran Khan in a meeting held on September 3, 2018 had desired to curb the practice of Hawala/ Hundi and other forms of illegal foreign exchange transactions. Finance Division was directed to take immediate steps to prevent the illegal practices through amendments in the existing laws.
The sources said, as directions to prevent Hundi/Hawala, a draft matrix on proposed amendments in Federal Investigation Agency (FIA), Foreign Exchange Regulations Act (FERA), 1947, Protection of Economic Reforms Act(PERA), 1992 and Anti-Money Laundering (AML) Act, 2010 (received from the office of Attorney General of Pakistan) was circulated to all stakeholders for their views/ comments.
On December 12, 2018 CCLC was also informed that Finance Minister Asad Umar held a meeting on October 1, 2018 with all the relevant stakeholders to discuss/finalise the proposed amendments. The progress report of meeting was forwarded by Finance Division to the Prime Minister's office for information on October 16, 2018.
The salient features of its proposed amendments in FERA, 1947, PERA 1992 and AML Act, 2010 are as follows: Foreign Exchange Regulations Act (FARA), 1947- (i) reason for the insertion of new Section 8A in FERA, 1947 is to restrict free movement of foreign exchange within the country without any limit as the explicit power is not available to State Bank of Pakistan. SBP, therefore, needs to have powers to issue necessary instruction as per proposed amendments; (ii) reason of amendment in Section 23(1) of FERA, 1947, is that various stakeholders including FIA have been approaching SBP to enhance the punishment provided in this section from two years to five years. SBP has also endorsed this enhancement in punishment keeping in view the gravity of foreign exchange violations; (iii) reason of amendment in section 23(2) of FERA 1947 is that FIA has been approaching SBP, saying that in case of expiry of the notification, they face difficulties in the courts regarding cognizability of offences punishable under this section. The proposed deletion shall remove such difficulty; (iv) amendment in section 23(3) has been proposed in consequence of amendment in sub section(2); (v) insertion of new proviso in section 23(3) of FREA 1947 will provide explicit powers to FIA to take prompt law enforcement actions against illegal foreign exchange operators without requirement of any formal complaint from SBP; and (vi) insertion of new section 3(B) of FERA 1947 will empower the tribunals to take actions against illegal foreign exchange operators in an expeditious and time bound manner.
Protection of Economic Reforms Act, (PEAR), 1992: Amendment was made in section 4(2) (g) of PERA 1992 which pertains to the notification by SBP on cross border or inland movement of foreign currency. The proposed deletion shall enable SBP to issue instructions regarding outward movement of cash foreign currencies by outgoing passengers which are proposed to be on per family basis instead of per person basis.
Anti-money Laundering Act, (AML), 2010: (i) the amendment in section 4 of AML Act, 2016, tends to enhance the punishment of offices of money laundering to make it more distinctive and different; (ii) amendment in section 6(4)(e) of AML Act, 2010, tends to remove the confusion about administrative process of the Financial Monitoring Unit (FMU) and any perceived sense of delays involved in the process. It will pave way for FMU's Egmont Group Membership; (iii) amendment in section 21(1) of AML, Act, 2010 tends to increase the attachment period of properties involved in money laundering during investigation stage since the existing duration of 90 days is too short and warranting repeated reference to court; (iv) amendment in section 21 of AML Act, 2010 tends to allow the prompt investigation of offence of money-laundering. It will address the risk of removal or concealment of any money or other property involved in money laundering due to the time consumed in obtaining court permission; and (v) amendment in section 16 of AML Act, 2010 tends to strengthen the AML/CFT regime in Pakistan.
It was further informed that the basic concept of the proposed amendments is to prevent the illegal practices of Hawala/Hundi and other forms of illegal foreign exchange transactions.
During course of discussion, it was observed that the instructions regarding countering money laundering had been issued by the State Bank of Pakistan and most of the people were not aware of these instructions. In order to streamline the matter, it was suggested that rules and notifications should be well publicized through various means including posting them on official website of SBP and other organisations dealing with foreign exchange transactions. It was also suggested that proposed regulations should aim at not only controlling money laundering but also in facilitating ease of transferring money for fair and needful purpose. It was further observed that the proposed amendments have not been vetted by the Law and Justice Division, which is essential requirement in such matters.
It was proposed that in case of conduct for civil recovery of the proceeds or unlawful conduct, the following may be added in the proposed amendment in the relevant laws: (i) Seizure of cash- any suspect cash(up to amount prescribed by the federal government/ SBP) may be seized ( by designated agency/ officer so authorised) for an initial 72 hours, subject to approval by a competent court for continuation ( maximum limit six months) ;(ii) detention of seized cash- the detention order to be issued by a competent court/designated judges up to maximum period of six months with only one extension of another six months ;(iii) forfeiture of cash- the seizing agency may seek forfeiture order after expiry of six months and if the respondent is unable to satisfy the court of origin/trial of money or its possession, should be forfeited in favour of the government without any criminal liability against the respondent.
After detailed discussion, the CCLC has proposed the following stipulations: (i) the proposed amendments may be vetted from Law and Justice Division before proceeding further;(ii) in the proposed amendment in section 23(1) of FERA, 1947, the word appearing in bold letters ' of less than one year' be replaced with 'up to five years'; (iii) in the proposed amendment in PERA Act, 1992 be revisited and international standard being maintained in different countries be followed;(v) with regard to the proposed amendment in AML Act, 2010 be inserted showing punishment to be awarded which should be commensurate with amount of the money alleged to have been laundered; (vi) in the proposed amendment in section 4 of AML Act, 2010 the word ' of not less than three years' be replaced with ' up to ten years; and (vii) in section 8(1) of AML Act, 2010, the word' for further extension up to one year' be added. The sources said, the proposed amendments were submitted to the federal cabinet last week, which ratified the amendments for taking them to next level.