Is AML law so serious for Pakistan that it could overshadow other major progress of Pakistan made to comply with FATF?
We have passed 9 Fatf laws in one month and sindh assembly also passed 5 fatf laws in one month. Is this true that AML law amendment is so serious that it could overshadow all progress of upcoming 13 points competition, blocking terrorist, 9 legislation, and convictions.
Answer to your question lies in whom do you ask the question from the FATF, the regulators, the financial sector, the corrupt/money laundrer, or the expert you would normally find gracing the economic section of the board on daily basis.
First of all Pakistan is a signatory to BASEL accords and as much controlling money laundering is its responsibility as per agreement. According to BASEL research Pakistan is at No 23 when it comes to ease in money laundering. Once we signed he FATF charter as a member we have to comply with the code/standards set forth by the body.
Why we became grey listed, beyond the political arm twisting, the indications were there right from the word go but the political setup of the time did nothing to manage the upcoming disaster rather it suited them and their political masters from abroad.
I'll try to phrase my words as easy as possible so that they are understandable and easy to comprehend by people not having a solid financial/economic background.
FATF related requirements are not just for AML but it starts or end with CFT as well (controlling the financing for terrorism), the laws being promulgated by the national/provincial assemblies not only address AML (anti money laundering) but CFT as well.
It starts with collection of charity money, Qurbani hides etc, that money then ends up being whitened through business, real estate, bullion, the banking sector, the financial sector and then it could be used for terrorism.
What FATF wants us to do is
1) Control Religious Terrorist parties capacity to collect charity/donation
2) Control the capacity and mechanism to do organized/individual corruption in Pakistan and bring Transparency in the financial system
3) Bring in laws to make sure that even if they are successful in collecting charity/donations/corruption their money cannot be whitened
4) Enhance capacity of law enforcement agencies to investigate and indict corruption and terrorism related financing
5) Bring in law/enhance our legal system to penalize/punish the corrupt/terrorists
Pakistan as a country cannot exist for long if it decided to go against FATF charter, we have to comply, in the long run all their demands will benefit Pakistan, cash (grey) economy will eventually become documented, once it does the tax collection will improve. You know the rest, I hope.
Now to the question, whether complying with FATF CFT/AML requirement will overshadow our economic progress actually it, it has impacted the grey economy in a very bad way, doing financial transaction without documenting/paying taxes is becoming difficult and will become even more difficult in the future. But if the business is documented, paying taxes not involved in any terror financing activities then nothing will happen to them.
Most of the people you'll find crying are either not aware of the real thing or those whose business will be impacted soon or has been impacted already. We will soon see regulations bringing in lawyers, doctors, goldsmiths/gold traders, real estate people/agents/developers in the tax/documented net. So there will be huge hue and cry.
Financial sector is already started to comply with all the regulation that are being introduced to check AML/CFT.
I hope this answers your question.
I don't visit this section anymore, if there is a valid/important question tag me and I'll try and answer it.
