The US State Department’s International Narcotics Control Strategy Report released recently estimated around 10 billion dollar per annum money laundering by Pakistanis. India’s comparable figure was much higher at 51 billion dollars. In other words, Pakistan’s money laundering is about 20 percent that of India.
There is a tendency on the part of Pakistani administrations to compare macroeconomic data with India, specifically those indicators where our performance is better. In this context, however, it is relevant to note that Pakistan’s nominal Gross Domestic Product as well as purchasing power parity is only 12 percent of India’s while our money laundering is 20 percent that of India.
The figure cited by the US State Department supports the estimate of money illegally remitted outside Pakistan that was made by the then Governor State Bank of Pakistan, Yaseen Anwar, in 2013. This amount did not include money transferred abroad through foreign currency accounts, which can be opened and are protected under the Protection of Economic Reforms Act 1992, laws that continue to be applicable today.
Be that as it may, the Sharif administration during its ongoing tenure has enacted appropriate legislation designed to combat the menace of money laundering.
However, it is relevant to note that the passage of an anti-money laundering law was a time-bound condition under the International Monetary Fund’s (IMF) 6.64 billion dollar Extended Fund Facility approved in September 2013 and completed in September 2016.
The need for strengthening the money laundering laws was identified in the very first Technical Memorandum of Understanding (TMU) between the Government of Pakistan and the IMF staff in September 2013 and the relevant structural benchmark stated “enact the amendments to the Pakistan Penal Code 1860 and the Code of Criminal Procedures 1898” by December 2013.
The amendment was to include tax evasion in the money laundering act. Half way into the programme this condition had still not been met and in June 2015, Letter of Intent submitted by the government to the Fund board, a prerequisite for the release of the eighth tranche, the TMU gave an extension to the government till December 2014 to pass the legislation through parliament and insisted that the government “use anti-money laundering tools to combat tax evasion and facilitate detection of potential cases of abuse of investment incentive scheme to launder criminal proceeds.”
On 16th December 2015, the government finally succeeded in meeting the deadline and the money laundering bill was notified. It allowed in cases where immediate action was required “the powers of search and seizure (to be) exercisable with prior permission of the senior officer of the concerned investigating or prosecuting agency not below the rank of an officer of BS-20.” However, sadly, more than a year after the passage of this act, there has been no high profile case of identifying and/or apprehending any one guilty of money laundering and/or tax evasion in this country. And this in spite of the fact that money laundering has continued at the same levels as before the law was enacted.
To conclude, Pakistan has one of the best laws in the world relating to several key areas of concern including money laundering, tax evasion, child labour, etc, but their implementation remains extremely weak. One can only urge parliament in general and the Opposition in particular to request the relevant investigating agencies to present data that notes the number of ongoing investigations as well as total assets (property and non-fixed assets) of those engaged in money laundering that have been seized.
Copyright Business Recorder, 2017