“Out of 27 FATF Action Plan items, Pakistan had already addressed 14 while substantial progress has been made in addressing the remaining 13 Action Plan items,” Shaikh said while delivering a keynote statement to the High-Level Panel on International Financial Accountability, Transparency and Integrity (FACTI).
Shaikh told the panel that Pakistan had made considerable progress in addressing the recommended actions of its Mutual Evaluation Report, which includes 15 legal amendments to achieve technical compliance with National Risk Assessment on ML/CT, implementation of AML/CFT measures on DNFBPs, CDNS and Pakistan Post, broadening the sanctions regime, etc.
Similarly, he said the Government of Pakistan had taken various measures in recent years to contain illicit financial flows through the strengthening of the AML/CFT regulations on Customer Due Diligence (CDD) and Know Your Customer (KYC) and that other AML/CFT instructions to financial institutions have been brought in line with FATF standards.
“To further align with international standards, the AML Act had been amended to include Tax Offences as predicate offences. A range of predicate offences have been added to the schedule of AML Act, to include serious offences including corruption, narcotics, terrorism and human trafficking,” he added.
The adviser further told the panel that Violations of Section 4(1) (un-authorized FX business) and Section 5 (Illegal transfers) of Foreign Exchange Regulation Act (FERA), 1947 had been incorporated into the schedule of the Anti Money Laundering (AML) Act, 2010 in terms of which those offences might also be punishable under the AML Act.
He said that amendments to the Protection of Economic Reforms Act (PERA) 1992 had been incorporated to restrict the feeding of foreign currency accounts by non-tax filer Pakistani residents.
Shaikh said that Pakistan had launched the Pakistan Remittances Initiative (PRI) to facilitate the inflow of home remittances into Pakistan through formal channels.
Resultantly, Pakistan had registered growth in remittances during the last decade, rising from $6.4 billion in FY08 to $23 billion in FY20. Automation of Electronic Import Form (EIF) and Electronic Export Form (EEF) by banks through Pakistan Customs software to synchronize import and export of goods and payments by banks were also some of the steps taken by the government to further streamline the processes.
“The State Bank of Pakistan and Federal Investigation Agency of Pakistan are continuing to identify illegal MVTS (hawala/ hundi operators) and take measures including closure, investigation and prosecution these operators,” Shaikh said.
In his statement, Shaikh also called upon the panel to look into how multinational corporations minimize their tax liabilities to revenue authorities in their country of operations. He observed that MNCs had devised sophisticated financial and operational models enabling them to manoeuvre their way through tax systems and shift their profits to low tax jurisdictions and, in many instances, tax havens that are highly opaque.
He said the Panama Papers highlighted the myriad ways in which the rich could exploit secretive offshore tax regimes – and widen the gulf between rich and poor. “Abuse of anonymous shell companies is among the reasons why many countries are facing greater challenges today in the face of the COVID-19 pandemic. For years, they have enabled corruption, fraud and tax evasion,” the adviser said.
He also drew the attention of the panel to research by Transparency International showing that the overall level of compliance on the part of countries with beneficial ownership transparency standards was low, as many countries had failed to take adequate measures such as the establishment of registers. Asset recovery by developing countries has been slow and legal framework remains cumbersome, he added.