Money Laundering is a process through which one make dirty money appears to be clean. The ‘appearance’ part is very important, because, under the laws of Pakistan, “dirty” money is never clean, no matter how many times it goes through the rinse and spin cycle of litigation. Prosecuting money laundering cases gives financial advantage to National Exchequer as the black money is being confiscated in the name of State.
Government of Pakistan introduced section 4 of Protection of Economics Reforms Act 1992 whereby citizens of Pakistan were free to bring, sell, withdraw and take out foreign exchange from Pakistan to abroad and no law enforcement agency was allowed to question the out-going passengers regarding the source of income and export of foreign exchange through airports, land and sea. Protection of Economics Reforms Act 1992 was introduced to boost Pakistan’s economy or to become an Asian Tiger or under the concept of “Open Economy” but in return, according to official reports, it cost Pakistan more than 11 Billion US Dollars which was drained from Pakistan to the western world.
State Bank of Pakistan is the custodian and the caretaker of foreign exchange which should be given full discretion and authority to make laws regarding foreign exchange especially in the light of Federal Legislative List of the Constitution of Pakistan 1973, where “Currency” is a subject matter of Ministry of Finance and not State Bank of Pakistan.
Secondly, in order to curb money laundering in Pakistan, Federal Government needs to revisit Anti Money Laundering Act 2010 wherein “Money Laundering” is a “Non Cognisable Offence” meaning-thereby Law Enforcement Agencies cannot investigate the matter at their own, until and unless courts give permission to do so. This leads to wastage of time and money of Law Enforcement Agencies especially against those culprits whose money and neck is at stake. Thirdly, in fiscal offences, burden of proof is always on the accused to prove his innocence whereas under Anti Money Laundering Act 2010, the provision of “Burden of Proof” is not included. It is also pertinent to mention here that under Anti Money Laundering Act 2010 there is no concept of “civil adjudication” by issuing Show Cause Notice to the accused.
Federal Board of Revenue is the biggest collecting revenue department of Pakistan and yet for the last 35 years Revenue Authorities deliberately blinded themselves towards the fact that commercial importers does not file any Income Tax Returns before the Revenue Authorities, reflecting money send out of country through “Hundi” against imported goods resulting into massive flight of capital. It raises serious questions as to how the untaxed money is converted into imported goods resulting into expansion of assets of importers at the cost of national exchequer. Revenue Authorities never bothered to cross verify income tax returns or sales tax returns submitted by the Tax Payer resulting into massive expansion of assets, nationally and internationally, especially in Private Educational Sector.
In the end, the coming Federal Government of Pakistan has to face many challenges especially of flight of capital through “Hundi”, cross verification of Income tax returns, expansion of assets at the cost of untaxed money, revisiting Anti Money laundering Act 2010 by making a separate Directorate for AML, forfeiting the assets, prosecution under AML Act, currency declaration forms be made compulsory at export stage etc.
In order De-list Pakistan from “Grey List” of Financial Action Task Force, result oriented and effective measures as mentioned above, needs to taken by Federal Government so that to make this dormant law of Anti Money Laundering into action.
The writer is a Barrister at Law.