ANTI MONEY LAUNDERING LAWS AMED BY

SECURITY ISSUES source: DAILY DAWN business page by Khaleeq kiani

“Cheaper The money laundering Input To Crime Is, The More Productive(active)The Criminal Will Be”

Edward winson

Analysis By:

• MADIHA RAZZAQ (19)

• AMEERA JAHANGIR (02)

• HUMERA.M.HANIF (14)

SESSION OBJECTIVES

• Brief overview of article

• What is money laundering

• Terrorist financing

• How world and Pakistan is affecting

• Provisions of AML act

• Controls taken by world

• Money laundering in Pakistan and how Pakistan is combating

• Sad side

• Suggestions

• Conclusion

What Article Says About

• Today Anti money laundering laws are surrounded by security threats and the reason behind is “TERRORISM”

• IMF and other regulatory institutions have advised member countries to make amendments in AML and CFT Act

• Pakistan is also being advised to revised policies for anti money laundering and terrorist financing

• Ghost of money laundering seems to be out of bottle

• Impressive efforts but unsatisfactory implementation

what is Money

laundering ??

• Conversion of

black money

• Obtained from

illegal activities

• To make it appear

from legal source

• Criminals of Money Laundering:

HISTORY

Water gate scandal in USA in 1973

Money laundering as a crime only attracted interest in the 1980s, essentially

within a drug trafficking context

In India money laundering is popularly known as Hawala transactions. It

gained popularity during early 90’s when many of the politicians were

caught in its net

PROCEDURE

TYPICAL MONEY LAUNDRING PROCESS

TERRORIST FINANCING

Terrorist financing involves the raising and processing of assets to supply

terrorists with resources to pursue their activities.

Terrorist use techniques like those of money launderers to evade authorities'

attention and to protect the identity of their sponsors and beneficiaries

Terrorists use the formal banking system, informal value-transfer systems,

Hawalas and Hundis and, the oldest method of asset-transfer, the physical transportation of cash, gold and other valuables through smuggling routes

EFFECTS ON WORLD AND PAKISTAN

Diversion of productive resources to harmful activities

Disturbs the development of financial institutions

Shatters customers trust

Government and population suffers a lot

Economic distortion and instability

PROVISIONS UNDER “AML” ACT :-

CTRS: It means Currency Transaction Reports exceeding such amount as may be specified by National Executive committee by notification in the official gazette.

STRs: It means Suspicious transaction reports that are conducted by or through that financial institution reason to have the financial reporting entity knows, suspect, or has a reason to suspect that it involves funds derived from illegal activities.

CDD: An actimize customer due diligence solution provides complete lifecycle & reassessment of customer’s risks as a part of Know Your Customer(KYC) ,allowing firms to identify ,manage , mitigate customers.

ECDD: Enhanced customers due diligence tool hides complexity behind the simple use interface for only the required customer data to be captured & relevant questions to be asked while dealing customer across different lines of businesses & jurisdiction.

PEP: According to Bank Secrecy Act/AMLA examination manual PEP-Politically Exposed Person generally includes a current or former senior political figure,, their immediate family & close assosiates.Banks should take all reasonable steps to ensure that they knowingly assist in hiding or moving the proceeds of corruption. PEPs will identify, monitor, design control these risk-based transactions.

HOW THE WORLD IS COPING UP WITH?

Countries have made amendments in AMLA Act 2010.

International regulatory authorities are practicing CTR, STR, CDD, ECDD and PEP

Promotion of regulatory measures by FATF

Government has decided to bring all domestic & international flows of fund to assess terrorism entities.

IMF doing assessment, providing technical assistance and drafting different policies

FATF ,which is an inter-governmental body, sets standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terror financing and other threats to integrity of international financial system.

MONEY LAUNDERING IN PAKISTAN

Money laundering is commonly done by hundi transactions.

FATF has blacklisted Pakistan for alleged money laundering, terrorist

financing and not fully complying with international AML act

Mr. Kalia and Mr. Khanani the directors of “Khanani and Kalia

International”(KKI), (the largest forex company in pak) were arrested

by FIA in 2008 on the charges of illegal transfer of about $10 billion

out of Pakistan

The black money generated through smuggling in goods and narcotics

trade that is between Rs.300 billion and Rs.500 billion. This makes a

whooping Rs.1000 billion. and according to ‘official and independent

experts, ever-growing black money is Rs.1.8 trillion, about 70 % of the total

economy.

These rough estimates suggest the sheer volume of laundered money in

Pakistan

CONTROLS BY PAKISTAN

Pakistan under the orders of IMF has added tax evasion crimes in 2014.

SBP has required all hundis to register as valid “foreign exchange institutions” and meet

minimum capital requirements in 2004

SBP adopted policy of “reporting requirements” for banking sector

SECP has applied “KYC provision” and within “3 days” reporting of suspicious transactions for

all banks

Pakistan became a member of in APG(Asian pacific group) in 2000 for implementation of AML acts at international standards

Agencies in Pakistan like NAB, FIA, ANF are monitoring financial transactions and crimes .

SAD SIDE

Implementation is not satisfactory

Action against suspicious transactions is very limited

Insufficient progress of Pakistan on action plan of FATF

Impossible to produce reliable estimate of money laundering

Financial transactions are in EDD (enhanced due diligence)

Pakistan is considered as non cooperative and highly risky for investment opportunities

SUGGESTIONS

The law should be implemented and improved for social, economic

development and GDP ratio

Pakistan must monitor and supervise private charity institutions to lessen

terrorist financing

Implement cross border currency requirement and target illicit cash courier

Should become member of “UN convention” for suppression of terrorist financing

CONCLUSION