EDITORIAL: The cabinet recently approved amendments to the anti-money laundering act 2010 for the second time in less than four months that would again require parliamentary approval that had earlier struck down the clause making money laundering a cognizable offence. The re-inclusion of this clause has prompted speculation that it was a key Financial Action Task Force (FATF) requirement. The recent amendment envisages empowering government entities including State Bank of Pakistan, Pakistan Securities and Exchange Commission, Federal Board of Revenue, National Savings Schemes Supervisory body and Pakistan Post Office to undertake investigation while private sector entities to be designated as AML/CFT authorities would include Institute of Chartered Accountants of Pakistan, Institute of Cost and Management Accountants, and Pakistan Bar Council.
On 21 February 2020, FATF noted that "all deadlines in the action plan have expired. While noting recent and notable improvements, the FATF again expresses concerns given Pakistan's failure to complete its action plan in line with the agreed timelines and in light of the TF risks emanating from the jurisdiction." It further noted that 14 conditions were largely addressed while 13 remained unmet and extended their implementation to June 2020, warning that "should significant and sustainable progress especially in prosecuting and penalising TF not be made by the next Plenary, the FATF will take action, which could include the FATF calling on its members and urging all jurisdiction to advise their FIs to give special attention to business relations and transactions with Pakistan."
On 28 April 2020, the FATF website noted that "the gravity of the Covid-19 situation globally and the consequent Covid-19 related measures that countries have adopted, such as confinement and travel restrictions, are making it impossible for assessed jurisdictions and assessors alike to conduct on-site visits and in-person meetings. This situation has significantly impacted countries' ability to actively participate in mutual evaluation and related follow-up processes. The FATF Plenary acknowledges these severe challenges that countries face at this difficult time. The FATF Plenary has therefore agreed to temporarily postpone all remaining FATF mutual evaluations and follow-up deadlines. Likewise, the FATF has decided on a general pause in the review process for the list of high-risk jurisdictions subject to a call for action and jurisdictions subject to increased monitoring, by granting jurisdictions an additional four months for deadlines. Thus, the FATF is not reviewing them in June."
However, the FATF website further notes that "despite the decision to temporarily postpone the above-mentioned process deadlines due to the current force majeure situation, the FATF will not let up its efforts to fight money laundering, terrorist financing and proliferation financing, and will continue working with all jurisdictions in its global network to ensure an effective implementation of its standards. The FATF is actively monitoring the impact of the COVID-19 crisis on measures to combat illicit financing. We remain vigilant to the threats posed by criminals and terrorists who may seek to exploit this period to further their criminal objectives."
Thus, while the new deadline for Pakistan is end-October; however, the recent urgency in the passage of Anti Money Laundering Act amendments by parliament is clearly evident through proactive behind-the-scene discussions with the opposition parties in parliament. This indicates pressure that is also implicit in the International Monetary Fund document on Pakistan's request of Rapid Financing Instrument where it states that the measures in response to Covid-19 "should not create moral hazard nor foster poor credit risk management practices."
It is, therefore, critical for the government to acknowledge that notwithstanding its stated position on holding previous office holders accountable for past money laundering and corruption it has to remain engaged with them to meet its international obligations given its numbers in the national and provincial assemblies (barring Khyber Pakhtunkhwa).
Copyright Business Recorder, 2020