Pakistan: ADB report finds defects in AML law

Asian Development Bank (ADB) report finds the provisions of the anti-money laundering ordinance relating to the supervision of Financial Monitoring Unit (FMU) of the State Bank of Pakistan (SBP) as being inconsistent with international standards and practices.

“The anti-money laundering ordinance also envisages that the director general of the FMU shall be supervised and controlled by the general committee. This is inconsistent with international standards and best practices as the FMU should have financial and operational autonomy,” stated the ADB in its report ‘Accelerating Economic Transformation Programme, (Pakistan): Proposed Program Cluster and Loans for Subprogram 1 of September 2008’

Pakistan adopted an anti-money laundering ordinance in September 2007. The ordinance provides the legal framework for AML activities, including recognising money laundering as a criminal offense and establishing a Financial Monitoring Unit (FMU) in SBP to receive and process reports of suspicious activities. The report said while the adoption of the ordinance is a significant milestone toward greater transparency, further improvements are needed. First, the anti-money laundering ordinance provides for a cumbersome supervisory structure consisting of a national executive committee and a general committee. The national executive committee includes relevant ministers, the SECP chairman, the SBP governor, and the director general of the FMU.

The general committee includes principal civil servants from the ministries represented at the national executive committee, the SECP chairman, the SBP governor, and the director general of the FMU. While the general committee is intended to provide assistance to the national executive committee in carrying out its functions under the anti-money laundering ordinance, it is unclear how this is supposed work in practice. One national committee to develop policies and strategies for AML/CFT would be a better structure. The anti-money laundering ordinance also envisages that the director general of the FMU be supervised and controlled by the general committee. This is inconsistent with international standards and best practices, as the FMU should have financial and operational autonomy.

Source: Daily Times