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Pakistan's anti-money laundering laws consist of Anti-Money Laundering Ordinance, 2007 and Anti-Money Laundering Regulations 2008. An attempt has been made in this paper to highlight the main provisions and characteristics of these laws for understanding the same.

To provide for prevention of money laundering and forfeiture of property derived from, or involved in, money laundering and for matters connected therewith or incidental thereto; the government enacted, the Anti-Money Laundering Ordinance (hereinafter referred to as Ordinance), which came into force with effect from 4th day of October 2007.1

Among other things, the ordinance defines the terms such as accounts transaction, financial institutions, foreign serious offences, predicate offence, and suspicious transaction report.2

The government in order to implement the law established the Financial Monitoring Unit (FMU) in the State Bank of Pakistan (SBP).3 The main function of the FMU is to receive suspicious Transaction Reports (STR) and reports on Currency Transaction (CTR) of specified monetary limit. The FMU after the receipt of said reports is required to:4

i) analyse the STRs and CTRs;

ii) disseminate information to the investigating agencies;5

iii) create and maintain data base of STRs and CTRs;

iv) to cooperate with FIUs and intelligence agencies of other countries.

v) to frame regulations in consultation with SBP.

All financial institutions are required to submit STRs and CTRs where they know or suspect or have reason to believe that the suspected transaction is an outcome of:

a) illegal activities or the same is intended or conducted in order to hide or disguise proceeds of crime;

b)an attempt to evade any requirement of Anti-Money Laundering Law; and

c)is an outcome of unlawful purpose.6

Where a property is suspected to be an outcome of money laundering, an officer investigating such matter may make an order for the attachment of the property. The officer who makes an attachment of the property is required to file a complaint before the court against the concerned persons within a period of 30 days.7

The investigation officer is required to initiate investigation within seven days after the attachment of the property and where the officer comes to the conclusion that such property is an outcome of money laundering, may ask the court to confirm the attachment.8

The investigation officer has the power to search, seize and arrest persons engaged in money laundering subject to taking permission of the court.9

All courts of sessions established under the Code of Criminal Procedure, 1898, within its territorial jurisdiction have the power to try and adjudicate the offences falling within the purview of Ordinance.10

All offences under the Ordinance are not cognisable and non-bailable. The court can take cognisance of such offence upon a complaint made by the investigation officer or by an authorized officer of the Federal or provincial government.11

An appeal against any final decision or order of the court established under the Ordinance lies before the High Court on any question of law or fact arising out of such decision order.12

Any investigation office who exercises powers under the Ordinance but acts without the permission of the court is liable to punishment under the Ordinance.13

Tipping of and confidentiality requirements have been defined in the law.14 The Ordinance is not applicable in relation to fiscal offences.15 The offences falling within the purview of Ordinance have been defined.16

The following are examples of potential suspicious transactions for both money laundering and terrorist financing. The lists of situations given below are intended mainly as a means of highlighting the basic ways in which money may be laundered.

1. Transactions which do not make economic sense.

2. Transactions inconsistent with the customer's business.

3. Transactions involving large amounts of cash.

4. Transactions involving structuring to avoid reporting or identification requirement. Transactions involving forcing currency exchanges that are followed within a short time by wire transfers to locations of specific concern (for example, countries designated by national authorities, FATF non-co-operative countries and territories, etc).

5. Transactions involving accounts.

6. Transactions involving transfers to and from abroad. Stated occupation of the transact or is not commensurate with the level or type of activity (for example, a student or an unemployed individual who receives or sends large numbers of wire transfers, or who makes daily maximum cash withdrawals at multiple locations over a wide geographic area).

7. Investment related transactions.

8. Transactions involving unidentified parties.

9. Transactions involving insurance. A customer obtains a credit instrument or engages in commercial financial transactions involving movement of funds to or from locations of specific concern when there appears to be no logical business reasons for dealing with those locations.

10. Transactions involving embassy and foreign consulate accounts.

(The writer is an advocate and is currently working as an associate with Azim-ud-Din Law Associates)

1. See Notification No SRO 83 (KE) 2007 dated 4.10.2007.

2. See Section 2 of the Anti-Money Laundering Ordinance 2007.

3. Section 6 of the Ordinance read with Notification No SRO 84(KE)/2007 dated 4.10.2007.

4. See Section 6 of the Ordinance.

5. See clause (K) of Section 2 of the Ordinance.

6. See Section 7 of the Ordinance.

7. See Section 8 of the Ordinance.

8. See Section 9 of the Ordinance.

9. See Sections 13, 14, 15, 16 and 17 of the Ordinance.

10. See section 20 of the Ordinance.

11. See Section 21 of the Ordinance.

12. See Section 23 of the Ordinance. An appeal can be filed within a period of 60 days from the date of communication of the decision or order.

13. See Section 32 of the Ordinance.

14. See Section 34 of the Ordinance.

15. See Section 41 of the Ordinance.

16. See Schedule to the Ordinance.

Copyright Business Recorder, 2012

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