ASIA: Pakistan cabinet set to hike money laundering fine.

As published on tribune.com.pk, Tuesday 21 July, 2020.

ISLAMABAD: The cabinet, in its meeting scheduled for Tuesday, is set to give the go-ahead for a massive increase up to Rs100 million in fine on offenders involved in money laundering in a bid to implement the action plan agreed with the Financial Action Task Force (FATF).

Draft amendments to the Anti-money Laundering (AML) Second Amendment Bill 2020 have been placed before the cabinet, which propose that money laundering be made a cognisable offence. The bill also proposes raising the fine for money laundering from the existing Rs5 million up to Rs25 million and in case of legal persons the fine may be increased to Rs100 million.

Pakistan is required by the FATF to implement an action plan to bring its financial system in compliance with the international FATF standards on anti-money laundering and countering the financing of terrorism (AML/CFT).

The Asia-Pacific Group, in its Mutual Evaluation Report (MER) on Pakistan, has also made recommendations on AML/CFT. In the wake of these developments and after consultations with the international consultants, the Financial Monitoring Unit (FMU) has proposed amendments to the AML Act 2010.

The proposed amendments will reflect the government’s resolve to strengthen its anti-money laundering regime in the country. These amendments are aimed at streamlining the existing AML law in line with the international standards prescribed by the FATF. These amendments would identify the AML/CFT regulatory authorities in Pakistan including the regulatory authorities for the designated non-financial businesses and professions (DNFBPs) and their powers.

Functions and powers of AML/CFT regulatory authorities have been clearly defined with powers to issue licences, regulate and perform other ancillary functions to comply with provisions of the AML Act.

The proposed amendments have been thoroughly reviewed by the international consultants assisting Pakistan in implementing the FATF action plan, APG Mutual Evaluation-recommended actions and other AML/CFT matters. The Ministry of Law and Justice has also vetted draft of the Amendment Bill 2020.

The Cabinet Committee on Disposal of Legislative Cases (CCLC) is not functional at present. Therefore, the vetted draft of the Second Amendment Bill 2020 is being placed directly before the cabinet for formal approval.

To ensure further compliance with the FATF demand, the cabinet is also expected to approve amendments to the law to expand cooperation with foreign countries to provide information about owners of companies in a bid to stop money laundering and terrorism financing.

The APG had pointed out some gaps which barred foreign regulatory authorities from accessing record of some individuals on grounds of national security and public interests.

Now, the Securities and Exchange Commission of Pakistan (SECP) has proposed amendments to the Companies Act 2017 and Limited Liability Partnership Act 2017 to address the gaps identified by the APG on money laundering.

The APG, in its report on Pakistan, had pointed out that there were limited provisions in place for Pakistan to provide international cooperation in relation to basic and beneficial ownership information.

The proposed amendments have been approved by the SECP policy board and they have also been shared with foreign consultants by the SECP to further synchronise them with the FATF suggestions.

Earlier, the cabinet considered a summary titled “Proposed Amendments to Companies Act 2017 and Limited Liability Partnership Act-FATF Related” on July 3, 2020 and directed the Ministry of Finance to resubmit the case in the next meeting after holding consultations with the minister for industries and production, adviser to the prime minister on parliamentary affairs and special assistant to the prime minister on accountability and interior.