Below notes written by Syed Tauqeer Bukhari (Advocate Supreme Court of Pakistan)
Designated non-financial businesses and professions [DNFBPs]
The following are the DNFBPs
- Real estate agents, builders, developers,
- Precious metals and precious stone dealers including jewelers and gem dealers,
- Lawyers, Accountants and other legal professionals
Responsibilities of Real Estate agents under AMLA:
The real estate agents who carry out monetary transactions for their clients, managing, operating, buying and selling of real estate and preparing documents, managing of client money, securities or other assets, managing banks etc and providing real estate services fall under the ambit of designated non-financial business and professions are legally bound to file suspicious transaction reports, If.
- Purchaser/seller’s economic profile does not align with the cost of the property
- Source of funds cannot be identified or is unclear
- Purchaser/seller is linked to negative news
- Client insists on using an intermediary in all interactions without sufficient justification
- Clients who appear to be acting on somebody else’s instructions without disclosing the identity of such person
- Unexplained delegation of authority by the client by using powers of attorney
- Purchaser/seller appears to be acting as proxies for the purchase of the properties and make attempts to conceal the identity of the beneficial owner
- Politically exposed client who is linked to negative news or crime or any client who is a family member or close associate of such politically exposed person
- Purchaser/ seller provides an address that is unknown, believed to be false, significant and unexplained
- Geographic distance between the agent and the purchaser or seller during the sale
- Purchaser/seller appears unconcerned about the economic or investment value of the property
- Purchaser buys property without making any attempt to inspect or review the brochure or marketing material of the property
- Purchaser/ seller is a shell company or trust and representatives of the company refuse to disclose the identity of the beneficial owners
- Payments from purchaser are financed by an unusual source
Responsibilities of Accountants and other Professionals under AMLA:
The accountants, lawyers, and other professionals who are rendering services to their clients for incorporation of company, firm or trust, audit of books of accounts as an auditor, prepares financial accounts and carry out monetary transactions or services for their client, are legally bound to file suspicious transaction reports if
- Client is politically exposed family member,
- Client who asks for short-cuts
- Client owns assets located abroad not declared in the tax return
- Client who obtains loan from unidentified parties
- Client makes large payments to subsidiaries or other entities within the group that do not appear within normal course of business,
- Client makes payments to other companies with similar or identical directors, shareholders or beneficial owners without any plausible reason,
- Client is making unusual payments in cash which does not commensurate with business activities,
- Company records consistently reflect sales at less than cost, but the company continues without reasonable explanation of the continued loss
- Company has a long period of inactivity from the date of incorporation, followed by a sudden and unexplained increase in financial activities, or if the company showing high turnovers in its accounts but does not have physical presence or apparent commercial activities,
- Company is registered at a fake address,
- Clients who offer to pay unusually high levels of fees for services, or who change their means of payment frequently.
- Transactions do not make economic sense,
- Transaction inconsistent with the customer’s business,
- Transactions involving large amount of cash,
- Transactions from and to abroad,
- Transactions involving unidentified parties, unauthorized or improperly recorded
- Transactions; inadequate audit trails,
- Instructions to an accountant from the client to conduct transactions without legitimate or economic reason,
- Unusually high value transactions, transfers of goods that are inherently difficult to value (e.g. jewels, precious stones, objects of art or antiques, virtual assets),
- Transactions using untraceable payment methods, including bearer instruments or new payment methods,
- Transactions that appear to be routing, with outgoing and incoming
- Transactions similar in size sent and received from the same parties,
- Transactions where there is lack of information or explanations, or where explanations are unsatisfactory or transactions which are undervalued.
Investigating or prosecuting agencies under AMLA:
Under Anti Money Laundering Act, 2010 (AMLA) following investigating or prosecuting agencies are designated to conduct investigation of a Money Laundering offence:
- Federal Investigation Agency (FIA)
- National Accountability Bureau (NAB)
- Counter Terrorism Department (CTD)
- Anti-Narcotics Force (ANF)
- FBR – Intelligence & Investigation, Inland Revenue (I&I, IR)
- FBR – Customs Intelligence
Regulatory authorities under AMLA:
- State Bank of Pakistan
- Security Exchange Commission of Pakistan
- Federal Board of Revenue for real estate agents, jewelers, dealers in precious metals and precious stones and accountants who are not the members of ICAP and ICMAP;
- National Savings for National Savings Schemes;
- Pakistan Post
The following SRBs are AML/CFT regulatory authorities
- Institute of Chartered Accounts for their respective members
- Institute of Cost Accountants for their respective members
- Pakistan Bar Council for lawyers
Punishment for money laundering:
Whoever commits the offence of money laundering shall be punished with rigorous imprisonment for a term which shall not be less than one year but may extend up to ten years and shall also be liable to fine which may extend up to twenty-five million rupees and shall also be liable to forfeiture of property involved in money laundering or property of corresponding value. The fine may extend up to one hundred million rupees in case of a legal person (Company/Form/trust etc). Any director, officer or employee of such legal person who is also found guilty under this section shall also be punishable with same punishment.
Liability for failure to file STR and for providing false information:
Whoever willfully fails to comply with the STR requirement or give false information shall be liable for imprisonment for a term which may extend to five years or with fine which may extend to five hundred thousand rupees or both. In the case of the conviction of a reporting entity, the concerned AML/CFT regulatory authority may also revoke its license or registration or take such other administrative action as it may deem appropriate.
Attachment of Property:
The attachment of property means prohibition of transfer, conversion, disposition of property by an order issued under section 8 of the AMLA.
Under the provision of section 8 of the AMLA, an investigating officer (IO) is empowered to provisionally attach a property. A property can be provisionally attached when the IO reasonably believes the property to be involved in money laundering. An IO can do this based on reports from the concerned investigating or prosecuting agency, by order in writing and with prior permission of the Court which should not be exceeding one hundred and eighty days from the date of the order. The courts can further grant extension up to 180 days.
The opportunity of hearing is vested right of every accused under the provision of Section 9 of the AML Act. As part of the investigation, a show-cause notice may be issued to the accused, calling upon them to explain sources of income, earning or assets through which property has been acquired. After that, the court can pass an order confirming the attachment, retention, seizure or release of the property.
When the provisional order of attachment has been confirmed the IO shall forthwith take possession of the attached property. The attachment or retention or seizure of the property will continue while investigations are being conducted.
The IO is further required by the court to submit monthly reports of the progress made in the investigation where property has been provisionally attached. Additionally, in every stage of the investigation, the IO is required to submit a report of proceedings to the relevant head of departments within 48 hours of any action.
IO is legally bound to follow the provisions of CrPC 1898. Additionally, there are certain provisions under the AMLA that specifically pertain to investigation procedures.
Power of Survey:
This section empowers the IO to enter any place within the limits of his jurisdiction and authorization. He may conduct inspections, check or verify any transactions pertaining to proceeds of crime, or to gather any information which may be useful for the investigation. During the survey, the IO can place marks of identification on the records inspected by him, make inventory of the property in question or record any statement from any person present that may be useful for the investigation. The IO is then required to forward a copy of the report based on the survey to the head of the concerned investigating or prosecuting agency.
Punishment for vexatious survey and search:
The investigating officer, if without prior permission from the Court, searches, detains, arrests any person or surveys any building or place; shall be liable on conviction for imprisonment or fine or both.
Search and Seizure:
This section lays out the powers of search and seizure afforded to the IO subject to the prior permission of the Court. An IO can conduct, search and seizure if there is a reason to believe that the accused has conducted any money laundering or related activity, is in possession of such property or has any records or documents that will be useful in the investigations. The IO or an authorized subordinate can enter and search any building, place, vessel, vehicle or aircraft, where he has reason to suspect that such record or properties are kept and seize any such record or property found as a result of the search. The IO is then required to forward a copy of the report based on the survey to the head of the concerned investigating or prosecuting agency within 48 hours. The investigating officer, on the basis of information obtained during survey under section 13, is satisfied that any evidence shall be or is likely to be concealed or tampered, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence.
Search of Persons:
Under this section, an IO is empowered to search any person whom the IO believes has concealed anything pertaining to matters that can be useful to the investigation. According to this section, the IO may search that person and seize such record or property which may be relevant to any money laundering proceedings. The IO will further record the statement of the person searched in respect of the records or property involved in money laundering. The IO is then required to forward a copy of the report based on the survey to the head of the concerned investigating or prosecuting agency within 48 hours.
The Sessions Court within its territorial jurisdiction, exercise the jurisdiction to try and adjudicate the offences punishable under this Act. The learned Special Judge (Customs, Taxation and Anti-Smuggling) has exclusive jurisdiction to try the offences of the “AMLA” i.e. predicate offences (scheduled offences of the AMLA), relating to tax evasion, all matters connected therewith or incidental thereto. The CNS Court, Anti-Terrorism Court and NAB Courts have the exclusive jurisdiction to try the cases of AML while seized with the predicate offence(s) i.e registered under the Control of Narcotic Substances Act, 1997, Anti-Terrorism Act, 1997 and National Accountability Ordinance, 1999.
Appointment of investigating officers and their powers:
The investigating or prosecuting agencies may nominate such persons as they deem fit to be the investigating officers under this Act from amongst their officers. The Federal Government may, by special or general order, empower an officer not below BPS-18 of the Federal Government or of a Provincial Government to act as an investigating officer under this Act and the Federal Government shall also determine the terms and conditions of his appointment.
Syed Tauqeer Bukhari
Advocate Supreme Court of Pakistan