ISLAMABAD:
The National Executive Committee on Tuesday designated piracy as a “predicate offence” for money laundering, making it punishable by up to 10 years in prison and a fine of Rs25 million and extended the anti-money laundering legal powers to the Pakistan Virtual Assets Regulatory Authority (PVARA).
The matter of extending the powers of Anti-Money Laundering (AML) Act to the provincial anti-corruption authorities was cleared in principle, subject to finalisation of the Standard Operating Procedures (SOPs) by the National Anti-Money Laundering and Combating of Financing of Terrorism Authority to stop any misuse.
Extending the AML Act powers to the provinces and making PVARA a reporting agency are part of the conditions that the International Monetary Fund (IMF) has set out as part of the action plan of the Governance and Corruption Diagnostic Assessment report.
The National Executive Committee of the Anti-Money Laundering and Combating of Financing of Terrorism took these decisions during a meeting, with Finance Minister Muhammad Aurangzeb in the chair, a day after the General Committee referred the matters to further tighten the anti-money laundering regime.
The committee also raised the cash transactions reporting limit from Rs2 million to Rs3 million in daily cash deposits in banks. The banks would now report all the cash transactions of over Rs3 million to the Financial Monitoring Unit (FMU).
However, the committee did not set any quarterly limit of maximum Currency Transaction Reports (CTRs), which would still allow people to deal in cash by keeping daily cash transactions marginally below Rs3 million.
“The NEC considered and approved the proposed revision to the thresholds for Currency Transaction Reports under the framework for analysing Suspicious Transaction Reports (STRs) and CTRs”, according to a statement issued by the Finance Ministry.
According to another major decision, the NEC approved a proposal to include Section 28 of the Pakistan Maritime Zones Act, 2023, in the Schedule I of the AML Act, the ministry said. The Section 28 relates to piracy, which has now been made a predicate offence for money laundering, punishable with up to seven years of imprisonment, up to Rs25 million fines and forfeiture of property.
The maritime law defines piracy as any illegal act of violence, detention or robbery committed for private gain by the crew or passengers of a private ship or aircraft against another vessel, its passengers or property, or against people or property in international waters or areas beyond any state’s jurisdiction.
The NEC approved the inclusion of the PVARA in Schedule IV of the AML Act. Now, the PVARA will have the powers of the AML law and can impose sanctions, including monetary and administrative penalties to the extent and in the manners as may be prescribed, upon their respective reporting entity, including its directors and senior management and officers, who violate any requirement of data reporting, record keeping and custom due diligence.
According to an IMF condition, PVARA, in coordination with FMU, will devise a framework to obligate Virtual Assets Service Providers (VASPs) for suspicious transactions reporting. The FMU, in coordination with PVARA, will devise a mechanism to register VASPs, holding NOC from PVARA, on goAML as reporting entities.
The IMF action plan states that Pakistan enhances investigation and prosecution of money laundering offenses, by removing legal ambiguity on requiring a predicate conviction, increasing quality and quantity of Suspicious Transactions Reports, strengthening law-enforcement agencies capacities for financial investigation, and improving cooperation on asset recovery.
The NEC also discussed the agenda of handing over the powers of anti-money laundering law to the provincial authorities. However, there were concerns that these powers could be misused. To address this issue, there is a possibility that the AML and the CFT Authority will conduct a review of the SOPs being practiced by the law-enforcement agencies to investigate and prosecute corruption and associated money laundering.
The AML and CFT Authority is also facing human resource issues and it is still working below the capacity that can undermine the authority’s work. The authority is required to suggest improvements, ensuring that all such SOPs cover statutory provisions related to corruption and money laundering, beneficial ownership identification, financial profiling and parallel financial investigation and asset tracing.
The Finance Ministry said that the NEC reviewed the performance of the FMU, institutional capacity and initiatives involving artificial intelligence and machine learning. The finance minister emphasised the importance of regular and timely follow-up and stronger coordination among relevant institutions to ensure effective implementation of the national AML-CFT framework.
The minister underscored the importance of strengthening the FMU’s analytical and operational capacity through a clear implementation roadmap with defined timelines. He emphasised that the NEC serves as an effective strategic forum for strengthening Pakistan’s AML-CFT framework and ensuring timely coordination, inter-agency cooperation and consistent monitoring for effective implementation of the measures discussed.
