New rules in the works to meet FATF conditions

The government is set to introduce new rules on forfeiture, management and auction of properties and assets relating to AntiMoney Laundering (AML) cases and transfer of investigations and prosecution of AML cases from police, provincial anti-corruption establishments (ACEs) and other similar agencies to specialised agencies to achieve remaining benchmarks of the Financial Action Task Force (FATF).

This is part of two sets of rules including the AML (Forfeited Properties Management) Rules 2021 and the AML (Referral) Rules 2021 under the National Policy Statement on Follow the Money approved by the federal cabinet meeting a few days ago.

These rules and related notifications for certain changes in existing schedule of Anti-Money Laundering Act 2010 (AMLA) would come into force immediately to be followed by appointment of administrators and special public prosecutors for implementation.

Based on these measures, the FATF would conclude if Pakistan has complied with three outstanding benchmarks, out of 27, that blocked its exit from the so-called grey list in February this year. Several review meetings of the FATF are scheduled to begin in the second week of June, culminating in the next FATF plenary on June 21-25.

The three outstanding action points (out of total 27) include (i) demonstrating that terrorist financing (TF) investigations and prosecutions target persons and entities acting on behalf or at the directive of the designated persons or entities; (ii) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions; and (iii) demonstrating effective implementation of targeted financial sanctions against all designated terrorists, particularly those acting for them or on their behalf.

Now, the government has decided to appoint dozens of administrators with the powers to confiscate, receive, manage, rent out, auction, transfer or dispose of or take all other measures to preserve the value of the properties and perishable or non-perishable assets (including those at godowns, maalkhanas or any other place) to be confiscated under the AML 2010 rules or court orders pursuant to proceedings under AMLA 2010.

Under the decision, regional directors of the Anti-Narcotics Force would be designated as administrators for the ANF, customs collectors for the Federal Board of Revenue, directors of directorates of intelligence and investigation of the Inland Revenue Service for the IRS, zonal directors for FIA and additional directors of recovery, disposal and assets management cells for National Accountability Bureau.

The AML (Forfeited Properties Management) Rules 2021 specify how the inventories would be measured, described or defined, protected and evaluated for auction and how to complete all processes thereto, including constitution of auction committees and how properties would be quantified or classified like if a property is of residential, commercial or industrial nature and what should be its market value or sale price etc.

For example, the movable case property worth more than Rs100,000 would be kept in the locker or vault in the State Bank of Pakistan, district or tehsil treasury or any nationalised bank. For withdrawal of such movable properties, the agency concerned would designate two officers of grade-17 or above and prior written permission of next supervisory officer of the agency would the required.

Each agency would establish a central asset recovery office to ensure assets recovery and management of the forfeited property and keep a designated central account with the SBP maintained by the ministry of finance where proceeds of property would be remitted by all agencies after attainment of the finality of forfeiture order by a court. All investigating and prosecuting agencies would exchange financial intelligence and information about the properties with other stakeholders for expeditious confiscation and forfeiture under the AMLA 2010.

Secondly, the Anti-Money Laundering (Referral) Rules, 2021 are being introduced to enable transfer of the cases from one set of investigation agencies to another. In this case, if police, the ACEs or any other governmental organisations, other than investigating and prosecution agency under the AMLA, while conducting an inquiry or an investigation of any offence, finds that an offence under the AMLA 2010 has been committed or is likely to be committed and such agency lacks jurisdiction to take cognizance of it, the head of such agency or authorised representative at any state of the investigation would refer the matter to the head of the agency concerned having jurisdiction to investigate.

Police, the ACEs or other governmental organisations would continue an inquiry or an investigation of the offence and would take necessary measures to preserve and retrieve the relevant information and evidence and case properties till formal acceptance by the investigating and prosecuting agency concerned as set out in the relevant clause of the AMLA and formal handing over and taking over of complete record.