What are the sources of Money Laundering (ML)?
Money laundering may not just involve wealth related to Drug Trafficking / Terrorism financing. List of crimes identified by Financial Action Task Force (FATF) as generators of criminal wealth also included:
- Forgery
- Extortion
- Marine Piracy
- Robbery or theft
- Illicit arms trafficking
- Environmental crime
- Murder, grievous bodily injury
- Corruption, bribery and kickbacks
- Counterfeiting and piracy of products
- Terrorism, including terrorist financing
- Illicit trafficking in stolen and other goods
- Kidnapping, illegal restraint and hostage-taking
- Insider trading and market manipulation, etc.
- Trafficking in human beings and migrant smuggling
- Fraud, especially computer-supported fraud (cybercrime)
- Participation in an organized criminal group and racketeering
- Illicit trafficking in narcotic drugs and psychotropic substances
- Tax evasion / Tax crimes (related to direct taxes and indirect taxes)
- Counterfeiting currency (including making of imitation and copies of original products/goods)
- Smuggling (including in relation to customs and excise duties and taxes also including movement of nuclear materials, cash smuggling)
What is the AML regulatory regime in Pakistan?
Presently, the Pakistan AML/CFT regime is governed by the following (National & International) legislations:
National
- AML/CFT/CPF Regulations and Guidelines on Risk Based Approach issued by SBP
- SBP Guidelines on Targeted Financial Sanctions (TFS) under UNSC Resolutions
- Anti-Money Laundering Act, 2010
- AML/CFT Sanctions Rules, 2020
- Counter –measures for High Risk Jurisdiction Rules, 2020
- Anti-Money Laundering Regulations, 2015 issued by Government of Pakistan
- Anti-Money Laundering and Countering Financing of Terrorism Regulations 2018 issued by SECP
- Benami transactions (Prohibition) act 2017 & Rules 2019
- Anti-Terrorism Act, 1997
- Control of Narcotics Substance Act 1997
- The Anti Narcotic Force Act, 1997
- National Accountability (NAB)Ordinance, 1999
- FBR Common Reporting Standard 2017
- Framework for Managing Risks of Trade Based Money Laundering and Terrorist Financing, 2019 issued by SBP
International
- Financial Action Task Force (FATF) Recommendations and Guidelines
- Wolfsberg Anti-Money Laundering Principles for Correspondent Banking
- Terrorist financing Risk assessment Guidance 2019 issued by FATF
Consequences of Money Laundering in Pakistan
a) Penalties Under Section 4 of the AML/CFT Act 2010
Whoever commits the offence of money laundering shall be punished:
- With rigorous imprisonment for a term which shall not be less than one year but may extend up to ten years
- And shall also be liable to fine which may extend up to twenty-five million rupees
- And shall also be liable to forfeiture of property involved in money laundering or property of corresponding value
- The fine may extend up to one hundred million rupees in case of a legal person. Any director, officer or employee of such legal person who is also found guilty under this section shall also be punishable as mentioned above
b) Reporting of Transactions (STRs/ CTRs) Under Section 7 of the AML/CFT Act 2010
Bank is liable to comply with the provisions of AML Act, rules and regulations issued there under for reporting suspicious transactions/currency transactions in the context of money laundering, financing of terrorism and financing of proliferation if it:
- Involves funds derived from illegal activities or is intended or conducted in order to hide or disguise proceeds of crime;
- Is designed to evade any requirements of this Act;
- Has no apparent lawful purpose after examining the available facts, including the background and possible purpose of the transaction; or
- Involves financing of terrorism, including fund collected, provided, used or meant for, or otherwise linked or related to, terrorism, terrorist acts or organizations and individuals concerned with terrorism
c) Law Enforcement Agencies (LEAs) Inquiries
Inquiries may be initiated against the Account Holder by various LEAs like NAB, FBR, FIA, NACTA etc.
| ILLEGAL ACTIVITIES |
| Money Laundering |
| Terrorist Financing |
| Hawala / Hundi |
| Proliferation Financing |
| Unauthorized Money Changer |
| Trade Based Money Laundering |
| Ponzi Scheme/Multilevel Marketing (MLM)/Network Marketing |
| Use of fake identification document for establishment of relationship / execution of transaction |
| Cryptocurrency / Virtual currency (like Bitcoin, Litecoin, Pakcoin, OneCoin, DasCoin, Pay Diamond or Initial Coin Offerings (ICO) tokens) |
| DO’s |
DON’Ts |
| Provide Valid Identity Document & Identification Information |
Use of Individual Personal account for Business purpose |
| Provide Source of Income / Wealth |
Opening of Numbered Account |
| Provide Purpose of Account Opening |
Violation of legal & regulatory requirements |
| Provide details of Ultimate Beneficial Owner (UBO) |
Use of Personal accounts for collection / distribution of donations |
| Provide details of Mandatee & Purpose of Mandate |
Dealing with Shell organizations / companies in trade transactions |
| Provide all relevant authentic documents (for Partnership, Companies, NGO/NPO, etc) |
Opening of Government accounts in the personal names of the Government official(s) |
| Provide Purpose & evidence of inward & outward Transactions (Cash & Non-Cash transactions) |
Misrepresentation of quantity and commodities in trade transactions |
| NGOs/ NPOs, Charities and Trusts accounts are used for legitimate purposes only |
Alteration of Identity documents and Trade related documents |
Inform the bank for any change in the personal record including:
- Address
- Contact number
- CNIC validity
- Employment / business status
- Identification document
|
Ignore any communication (letter/ e-mail/ sms/ public notice etc) from your bank |
|
|
