Governor State Bank, Raza Baqir, while addressing Financial Crimes Summit at Karachi disclosed that both Financial Action Task Force (FATF) and International Monetary (IMF) have expressed satisfaction over the progress made in combating money laundering and terror financing. He said that the measures taken so far curbing money laundering and terror financing are satisfactory. He emphasised that success in tackling the twin menace effectively will help the country get pout of grey list. Raza Baqir claimed that zero tolerance is being shown for terror financing which is now impossible from trade related activities.

Financial regulators such as Central Bank and Security Exchange Commission of Pakistan play a crucial rule in curbing money laundering and terror financing. Bur unfortunately these institutions could not perform their regulatory function satisfactorily due to political pressure and weak legal framework. The legal framework is still not robust enough to completely eradicate money laundering and terror financing and greater emphasis is on administrative actions. The bankers like Saeed Ahmad former President National Bank of Pakistan and ex-President Summit Bank Hussai Lawai, who were later arrested on the charges of facilitating money laundering for political elites had the case of putting Pakistan on grey list in June 2018.

There was a loud talk of making comprehensive legislation to plug loopholes in the anti-money laundering and counter terrorism financing regimes. Indication were given to amend Protection of Economic Reforms Act of July 1992 because certain provisions of this ACT dilutes regulatory role of the central bank in checking money laundering through banking channels. The fake bank account case of Omni Group confirms it. The PTI led ruling Coalition does not have the required majority to amend this Act and opposition does not want to give parliamentary support to government to pass the required legislation from both houses of the parliament.

The international community is now serious about the financial crimes like money laundering. The action of Financial Crime Agency of UK for the retrieval of $190 pounds laundered money to Pakistan is one such example.

As told by Governor central bank, the FATF may have appreciated the measures taken for choking the conduits of money laundering and terror financing. But the international watchdog was not fully convinced about strengthening the legal and institutional frameworks to effectively combat these crimes and the grey list period of Pakistan was extended till February next year. Still there is greater reliance on administrative actions to streamline prudential regulations. Recently, the FATF has pointed out glaring deficiencies in the regulatory framework. Consequently, the government has decided to scrutinize Rs.4 trillion deposits which people have invested in different National Savings Schemes of Central Directorate of National Savings. For this Purpose Ministry of Finance has floated an expression of interest to invite bids from commercial banks to enter into third party agreement to facilitate the enforcement of regulations envisaged in Anti-money laundering Act of 2010 and provisions of Anti-Terrorist Act of 1997. It merits mention here that these laws on the statue book were framed and enacted in the tenures of previous governments. It would be worthwhile to evaluate the efficacy of these laws. The government intends to complete the process of scrutiny of deposits with Central Directorate of National Savings of depositors within the next six months and their risk profile by December 2020. It remains to be seen how far the action satisfy the FATF not to extend greylist period beyond February as Pakistan has implemented fully four points out 27 points action plan and has shown partial compliance on few other points. The watchdog persistently insist on providing strong legal and institutional framework to fight anti-money laundering and terror financing in line with the UN Security Resolutions numbering 1267 and 1373. Will the opposition political parties help out the government in the prevailing situation of polarization?

© Pakistan Press International, source Asianet-Pakistan