UAE to help Islamabad stem flow of illegal billions
▶ Airport seizure in 2015 highlighted problem of billions being spirited illegally out of Pakistan every year
The UAE, and Dubai in particular, is to play a leading role in Pakistan’s fight against money laundering, a top adviser to the country’s prime minister said.
Billions of dollars are being smuggled out of Pakistan each year, and Prime Minister Imran Khan has pledged to stamp out the practice.
During his populist election campaign earlier this year, Mr Khan promised to track down and return money looted from the country. The issue is understood to have been the focus of talks between Mr Khan and UAE leaders during his visit to the Gulf in September.
Mr Khan’s government is facing a financial crisis and is running short of foreign currency.
Mirza Shahzad Akbar, Mr Khan’s special adviser on accountability, said Islamabad was pushing for mutual assistance agreements to help track down money and assets, and had been offered the UAE’s “full co-operation”.
He said dirty money was laundered through obscure shell companies and tax havens. The cash is then invested in countries such as the UK, Switzerland and the UAE.
In March 2015, Pakistani Customs officers stopped a glamorous young woman at Islamabad’s Benazir Bhutto International Airport.
Ayyan Ali, then 22, was one of the country’s top models and widely known as the face of a large mobile phone company.
Officers said they found more than $500,000 (Dh1.83 million) in cash in her luggage, which they claimed she was trying to smuggle out of Pakistan on a flight to Dubai.
Her continuing criminal case has attracted widespread media attention. Ms Ali continues to deny allegations of smuggling.
Today, away from the public glare that the incident created, billions of dollars are believed to be being smuggled out of Pakistan each year.
But Pakistani Prime Minister Imran Khan has pledged to stop the practice. His government, in the middle of a financial crisis and lacking foreign currency, is hoping to claw back money illegally moved overseas.
“All sorts of money is going out,” said Mirza Shahzad Akhbar, Mr Khan’s special adviser on accountability. “There are proceeds of crime that are going out, there’s non-taxed money that’s going out – it’s all getting mixed.
“This is our government’s effort to start to reduce it and then get to the point of actually stopping it completely. In that, I think Dubai or UAE has to play the most important role.”
Each year, an estimated $10 billion is taken out of Pakistan by charter flights, ships, through Afghanistan or by hawala – a system of money transfer commonly used across the Middle East.
The vast sums often come from the drug trade, corruption and extortion rackets, or cash hidden from the taxman.
Mr Khan’s populist campaign promised to track down and return money illegally taken from the country, which was believed to have been part of talks between the prime minister and UAE leaders during his visit in September.
Mr Akhbar said Islamabad was pushing for mutual assistance agreements to help track money and assets, and had been offered the UAE’s “full co-operation”.
He said he was due to hold more talks with Sultan Al Badi, the UAE Minister of Justice.
The two countries are believed to be close to agreement on a draft law to allow the sharing of information about financial crimes in foreign jurisdictions.
The UAE this week also announced a new anti-money laundering law to battle the financing of terrorism.
Mr Akhbar told The National how dirty money was laundered through obscure shell companies in tax havens. Once the cash is clean, criminals often invest it in countries such as the UK, Switzerland and the UAE.
Pakistani investigators recently uncovered a network of more than 100 such shell companies that had been used to launder billions of rupees.
“The mutual co-operation between the two countries can really help us put a stop to it,” said Mr Akhbar, a former prosecutor. “Money laundering does not help any government. We have to be watchful to see if this money is corrupt or the proceeds of crime.”
He said more than 10,000 commercial and residential sites belonging to Pakistanis were identified in the UAE.
A recent report by Pakistan’s Federal Investigation Agency submitted to the Supreme Court identified Mr Khan’s sister, Aleema Khanum, as among 44 prominent political figures from Pakistan who own unidentified property in the UAE. Investigators are examining the names to establish which properties, if any, have been declared to tax authorities.
Younis Al Khoori, undersecretary at the UAE Ministry of Finance, confirmed that the two countries were exchanging tax information.
“The UAE is committed to implementing international economic standards to the highest levels of transparency with regards to tax-related matters,” Mr Al Khoori said. “The UAE is fulfilling its international commitments and signed international treaties.”
Charles Laubach, a partner at the Afridi and Angell law firm in Dubai, said that while the UAE was making inroads into tackling money laundering, there was room for improvement.
Mr Laubach said anti-money laundering laws introduced in the country in 2002 had been tightened significantly in 2014, and that he expected even stricter steps in the near future.
The changes have made it harder to open bank accounts, for example, while regulated companies in finance also have to comply with tight rules to ensure suspicious transactions are identified and reported.
“Every country in the world has room for improvement,” said Mr Laubach, who has worked in the UAE for more than three decades.
“But anti-money laundering regulations mean it is getting harder and harder to hide the proceeds of illicit activity, whether it’s in money or property.
“The government wants the UAE to have an excellent reputation worldwide for compliance.
“They don’t want the reputation of being a money laundering haven, which would be bad for the image the UAE is trying to project overseas. The UAE takes this very seriously and they’re moving in the right direction.”
Mr Khan has also approached Sajid Javid, Britain’s Home Secretary, who agreed to a new anti-corruption partnership on a recent visit to Islamabad.
London has become notorious in the eyes of many in Pakistan as a haven for members of Pakistan’s political elite to stash corrupt wealth.
But British officials stress that corruption cases can only be brought on solid evidence and are unlikely to succeed if they appear to be political persecution.
Mr Akhbar said Pakistan’s message to the UAE was simple: “We will give you the access to our systems. We would like to have the same kind of co-operation from you.
“I hope that they can cut all the red tape and our policemen can speak to their policemen and they can investigate things together.”
The UAE is committed to implementing international standards to the highest levels with tax-related matters YOUNIS AL KHOORI Undersecretary, Ministry of Finance