Day 2

Anti Money
Laundering Act
 Ch # 23: Anti Money Laundering
The reason behind this enactment is to provide for prevention of money laundering,
combating financing of terrorism and forfeiture of property derived from, or involved in,
money laundering or financing of terrorism and for matters connected therewith or
incidental thereto

Main Contents of the Chapter

 What is money Laundering

 National Executive Committee & General Committee
 Financial Monitoring Unit
 STR and CTR
 Appointment and Powers of Investigating officer
 Actions under Anti money Laundering Act
 Involvement of Courts
 Arrangements with Foreign Government
Ch # 23: Anti Money Laundering

What is
Money Laundering ?
 Ch # 23: Anti Money Laundering
Offence of money laundering (Sec 3)
A person shall be guilty of offence of money laundering, if the person:
• Acquires, converts, possesses, uses or transfers property, knowing or having reason
to believe that such property is proceeds of crime;
• Conceals or disguises the true nature, origin, location, disposition, movement or
ownership of property, knowing or having reason to believe that such property is
proceeds of crime;
• Holds or possesses on behalf of any other person any property knowing or having
reason to believe that such property is proceeds of crime; or
• Participates in, associates, conspires to commit, attempts to commit, aids, abets,
facilitates, or counsels the commission of the above 3 acts.
 Ch # 23: Anti Money Laundering
Proceeds of crime
Any property derived or obtained directly or indirectly by any person from the
commission of a predicate offence or a foreign serious offence

Predicate offence
An offence specified in the Schedule to this Act

Foreign serious offence

• against the law of a foreign state stated in a certificate issued by, or on behalf of,
the government of that foreign State; and
• which, had it occurred in Pakistan, would have constituted a predicate offence;
 Ch # 23: Anti Money Laundering
Predicate Offences (Schedule)
Some examples of Predicate offences (under the schedule) are

 Murder
 Kidnapping
 Buying or selling any person as a slave.
 Theft
 Extortion.
 Robbery
 Hijacking
 Criminal breach of trust.
 Dealing in stolen property.
 Forgery of valuable security, will, etc.
 Using a forged document as genuine.
 Falsification of accounts.
 Using a false trade-mark or property mark.
 Infringement of copyright
 Unlawful immigration
 Corruption and Corrupt Practices
 Ch # 23: Anti Money Laundering
Punishment for money laundering (Sec 4 & 37)
Whoever commits the offence of money laundering shall be
• Punishable with rigorous imprisonment for at least 1 year and at most 10 years;
• Liable to fine which may extend to Rs. 1 Million; and
• Liable to forfeiture of property involved in the money laundering

Penalty in case of a Company (includes body corporate and firms)

• Fine may extend to Rs. 5 Million
• Every director, officer or employee found guilty shall also be punishable under this
section.
• Where a company contravene the provisions of this Act or any related rules etc,
every responsible person (director/partner, manager, secretary or other officer)
shall be liable to be proceeded against and punished accordingly
(except he proves that contravention took place without his knowledge or that he
exercised all due diligence to prevent such contravention)
 Ch # 23: Anti Money Laundering

National Executive Committee &

General Committee (Sec 5)
 Ch # 23: Anti Money Laundering
Composition of National Executive Committee & General Committee
National Executive Committee General Committee
Chairman Minister Finance or Advisor to Secretary Finance
Prime Minister on Finance/
concerned Minister
Secretary Director-General, FMU Director-General, FMU
Members Minister Foreign Affairs Secretary Foreign Affairs
Minister Law and Justice Secretary Law
Minister Interior Secretary Interior
Governor SBP Governor SBP
Chairman SECP Chairman SECP
Chairman NAB Director-General, FCIW, NAB
Director-General , FMU Director- General, FMU
Any other member to be Any other member to be
nominated by FG. nominated by FG.
 Ch # 23: Anti Money Laundering
Functions of National Executive Committee & General Committee

Lists to Cram
Ch # 23: Anti Money Laundering

Financial Monitoring
Unit (FMU)
 Ch # 23: Anti Money Laundering
Establishment of FMU (Sec 6)
• FG shall, by notification in Official Gazette, establish a FMU

• FMU shall be housed in SBP or at any other place in Pakistan.

• FMU shall have independent decision making authority on day-to-day matters

• A Director -General who shall be a financial sector specialist shall be appointed by

the FG in consultation with SBP to head FMU and exercise all powers and functions
of the FMU subject to the administrative oversight of the General Committee.
 Ch # 23: Anti Money Laundering
Powers and Functions of FMU (Sec 6, 46 & Regulation 7)

• List to Cram
 Ch # 23: Anti Money Laundering
Freezing of Property (Regulation 7 of Anti-Money Laundering Rules 2008)
Where a reporting entity knows, suspects or has reasons to suspect that any property or
account is involved in money laundering or terrorist financing and needs immediate
attention or action on the part of FMU as to the freezing of such property or account:
• Concerned reporting entity shall immediately inform Director General of such
property or account along with the grounds that warrant immediate action.
Ch # 23: Anti Money Laundering

Suspicious Transaction
Report (STR)
&
Currency Transaction
Report (CTR)
 Ch # 23: Anti Money Laundering
Suspicious Transaction Report (Sec 7)
Every financial institution shall file with the FMU, in the prescribed manner, STR, if
financial institution and reporting entity knows, suspects, or has reason to suspect that
transaction or pattern of transactions to which this transaction is a part:
• Involves funds derived from illegal activities or is intended or conducted in order to
hide or disguise proceeds of crime;
• Is designed to evade any requirements of this section;
• Has no apparent lawful purpose after examining available facts, including background
and possible purpose of the transaction; or
• Involves financing of terrorism

STR/CTR shall be filed immediately (within 7 working days of that suspicion transaction)

Keep and maintain all record related to STRs and CTRs for a period of at least 5 years

Any other government agency, autonomous body or regulatory authority may also share
intelligence or report their suspicions on similar basis to FMU

Guide containing examples of possible suspicious transactions in Appendix-1 & II

 Ch # 23: Anti Money Laundering
Regulation 5, Anti-Money Laundering Rules 2008 (Currency Transactions Reports)
When a financial institution or a Non-financial businesses and profession undertakes a cash
based transaction involving payment, receipt, or transfer of an amount exceeding the
minimum threshold as specified by National Executive Committee (NEC), they shall file a
report of such transaction on prescribed format

Exemptions
NEC may exempt a financial institution from above reporting requirements with respect to
transactions between financial institutions and following categories of entities:
• A department or agency of FG or Provincial Government or any autonomous body under
FG or provincial Government.
• Any business or category of business the reports on which entail little or no risk
concerning money laundering and terrorist financing.

Secretary of the NEC shall publish in official gazette at appropriate times (at least once each
year) a list of all the entities whose transactions with financial institution are exempt
 Ch # 23: Anti Money Laundering

Appointment and Powers of

Investigation Officer
 Ch # 23: Anti Money Laundering
Appointment of investigating officers and their powers (Sec 24)
• Investigating agencies may nominate amongst their officers such persons as they think
fit to be the investigating officers under this Act from.

• FG may, by special or general order, empower an officer not below BPS-18 of Federal
or Provincial Government to act as an investigating officer.

• Investigating officer may exercise powers and discharge the duties, subject to such
conditions and limitations as the FG may impose.

Punishment for vexatious survey and search (Sec 32)

Any investigating officer who, without prior permission from the Court:
• Surveys or searches, or causes to be surveyed or searched, any building or place; or
• Detains or searches or arrests any person,
Shall be liable on conviction for imprisonment for a term which may extend to 2 years or
fine which may extend to Rs. 50,000 or both.
 Ch # 23: Anti Money Laundering

Actions under Anti-Money

Laundering Act 2010
 Ch # 23: Anti Money Laundering
Attachment of property involved in money laundering (Sec 8)
Attachment
Means prohibition of transfer, conversion, disposition or movement of property u/s 8

• Investigating officer may with prior permission of Court, provisionally attach property
which he reasonably believes to be proceeds of crime or involved in money laundering

• Property may be attached for a period not exceeding 90 days from date of order.

• Within 30 days from such attachment, file a complaint before the Court.

• Within 48 hours immediately after attachment, forward a copy of the order, along with
the report, to the head of the concerned investigating agency:
o In a sealed envelope;
o In prescribed manner
 Ch # 23: Anti Money Laundering
Investigation (Sec 9)
Notice of attachment / seizure
• Investigating officer shall, within 7 days from the date of order of attachment (u/s 8)
or seizure of property (u/s 14 & 15), serve a notice of at least 30 days on person
concerned.

• The notice shall call upon such person to indicate the

o Sources of income, earning or assets from which he acquired that property
o Evidence on which he relies
o Other relevant information and particulars
o Reasons why the properties should not be declared to be involved in money
laundering and forfeited to FG
 Ch # 23: Anti Money Laundering
Findings of investigation officer
• Investigating officer shall record a finding after:
o considering the reply, if any, to the notice issued;
o hearing the aggrieved person; and
o taking into account all relevant materials placed on record before him;

• If investigating officer confirms that any property is involved in money laundering,

he shall apply to Court for order confirming attachment or retention.

• Investigating officer shall forthwith take possession of the attached property

• Such attachment or retention of the seized property or record shall:

o Continue during proceedings of predicate offence or money laundering;
o Become final if concerned person is proved to be a guilty of money laundering
 Ch # 23: Anti Money Laundering
Actions
• Court may, on application of investigating officer, order immediate sale of the
property in any manner deemed appropriate, where
o Property seized is perishable or subject to speedy and natural decay, or
o Expense of keeping it in custody is likely to exceed its value

• Where on conclusion of a trial for any predicate offence or money laundering,

person concerned is released; attachment or retention shall cease to have effect.

• Where attachment of any properly or retention of seized property or record

becomes final, the Court shall make an order for forfeiture of such property.
 Ch # 23: Anti Money Laundering
Forfeiture of Properties
Vesting of property in FG (Sec 10)
• All the rights and title in such property shall vest absolutely in FG
• Any encumbrances be void

Management of forfeited properties (Sec 11)

• FG may appoint as many trustees and receivers as it think fit
o Administrator shall receive and manage forfeited properties in prescribed manner
o Administrator shall also take such measures, as FG may direct, to dispose of the
properly which is vested in the FG
• Administrator may sell property after reasonable notice to FG, if
o Property seized is perishable in nature or subject to speedy and natural decay, or
o Expense of keeping it in custody is likely to exceed its value
 Ch # 23: Anti Money Laundering
Power of survey (Sec 13)
• Where an investigating officer has reasons to believe that an offence of money
laundering has been committed, he may, with the permission of the Court, enter any
place at which any act constituting such offence is carried on:
o Within the limits of the area assigned to him; or
o In respect of which he is authorized for the purposes of this section by such other
authority who is assigned that area
• Investigating officer may require any proprietor, employee or any other person who
may be present there to
o Afford him necessary facility to inspect such required record available at such place
o Afford him necessary facility to check or verify proceeds of crimes or any
transaction related to proceeds of crimes
o Furnish required information which may be useful for any proceedings under Act.
• Investigating officer acting under this section may:
o Place marks of identification on records inspected and make extracts/copies
o Make an inventory of any property checked or verified by him
o Record statement of any person present in the place (useful for any proceeding)
 Ch # 23: Anti Money Laundering
Search and seizure (Sec 14)
• Where investigating officer has reason to believe that any person:
o has committed any act which constitutes money-laundering,
o is in possession of any proceeds of crime involved in money laundering, or—
o is in possession of any records relating to money-laundering,

then he may, either himself or authorize any officer subordinate to him, to:
o Enter and search any suspected building, place, vessel, vehicle or aircraft
o Break lock of any door, locker, safe, almirah etc, where the keys are not available
o Seize any record or property found as a result of such search
o Place marks of identification on record or make extracts or copies therefrom
o Make a note or any inventory of such record property
o Examine on oath any person, who is found to be in possession or control of any
record or property, in respect of all matters relevant for investigation

• Investigating officer shall, within 30 days from such seizure, file an application,
requesting for retention of such record or property before the Court.
 Ch # 23: Anti Money Laundering
Search of persons (Sec 15)
• If an investigating officer has reason to believe that any person has secreted about the
person or anything under his possession, ownership or control, any record or proceeds of
crime which may be useful for or relevant to any proceedings under this Act, he may, with
the prior permission of the Court, search that person and seize such record or property.
• Investigating officer shall, within 30 days from such seizure, file an application requesting
for retention of such record or property before the Court.

• Where after search of a person, arrest of such person is necessary, investigating officer
shall take such person within 24 hours to the nearest Judicial Magistrate
• If detention of such person is required for more than 24 hours, investigating officer shall
obtain order from Judicial Magistrate for a period not exceeding 15 days.
• Magistrate shall forthwith discharge such person if no reasonable ground are for found

• Investigating officer shall record the statement of the person searched

 Ch # 23: Anti Money Laundering
Power to arrest (Sec 16)
• If investigating officer or any other officer of agency has reason to believe that any
person has been guilty of an offence punishable under this Act, he may after
obtaining warrant, from the Court or nearest Judicial Magistrate, arrest such person
• Officer shall, as soon as may be, inform him of the grounds for such arrest.
• Person arrested shall be taken to judicial magistrate having jurisdiction within 24
hours

Retention of property (Sec 17)

• Where any property has been seized (u/s 14 or 15) and investigating officer has reason to believe
that such property is required to be retained for investigation (u/s 9) such property may be
retained for a period not exceeding 90 days from the time of seizure:
• Investigating officer shall duly inform Court about any strange nature of seized property and,
where necessary, seek appropriate directions for its proper care during retention.
• On expiry of 90 days, property shall be returned to the person from whom such property was
seized unless the Court permits retention of such property beyond the said period.
• (Court shall be satisfied that the property is prima facie involved in money laundering)
• After passing order of forfeiture Court shall direct the release of all properties other than the
properties involved in money laundering to the concerned persons
• Such agency shall keep such order and material for such period as may be prescribed.
 Ch # 23: Anti Money Laundering
Retention of records (Sec 18)
• Where any record has been seized (u/s 14 or 15) and the investigating officer has
reason to believe that any of such records are required to be retained for an inquiry,
he may retain such records for a period not exceeding 90 days from time of seizure.

• Person, from whom records were seized, shall be entitled to obtain copies of such
records

• On expiry of 90 days, records shall be returned to the person from whom such
records were seized unless the Court permits retention beyond the said period.
(Court shall be satisfied that the records were required for investigation u/s 9)

• After passing of an order of forfeiture, Court shall direct the release of the records
to the person from whom such records were seized.
 Ch # 23: Anti Money Laundering

Involvement of Courts in
Anti-money Laundering Act, 2010
 Ch # 23: Anti Money Laundering
Jurisdiction (Sec 20 & 23)
Court of Session established under the Code of Criminal Procedure, 1898 shall, within
its territorial jurisdiction, exercise jurisdiction to try and adjudicate these offences

• Where predicate offence is triable by any court other than Court of Session, offence
and all connected matters shall be tried by that Court; and
• Where predicate offence is triable by any court inferior to Court of Session, offence
and all connected matters shall be tried by the Court of Session.

Appeal to High Court

• Any person aggrieved by final decision or order of Court may prefer an appeal to
High Court within 60 days from date of communication of the decision or order
• High court may also give extension in the stipulated time up to next 60 days
 Ch # 23: Anti Money Laundering
Appointment of Public Prosecutor (Sec 22)
FG may appoint a Public Prosecutor on terms and conditions deemed fit
• Must be an advocate of a High Court
• Should be in active practice as an Advocate for at least 7 years in High Court
• Shall be competent to conduct proceedings under this Act before a Court

When Prosecutor is temporarily unable to conduct proceedings, proceedings shall be

conducted by any person authorized by the Court.
 Ch # 23: Anti Money Laundering
Offences to be non cognizable and non-bailable (Sec 21)
• Every offence punishable under this Act shall be non-cognizable and non-bailable;

• Person convicted for imprisonment of more than 3 years shall not be released on bail
or on his own bond unless:
o Public Prosecutor has been given due notice; and
o Court is satisfied that there are reasonable grounds for believing that he is not guilty
of such offence and that he is not likely to commit any offence while on bail
(Where Public Prosecutor opposes the application)
 Ch # 23: Anti Money Laundering

Arrangements to Combat Money

Laundering with Foreign Countries
 Ch # 23: Anti Money Laundering
Reciprocal Arrangements with foreign countries
Agreements with foreign Governments (Sec 26)
FG may enter into such an agreement for:
• Enforcing the provisions of this Act;
• Regarding any offence under this Act or under corresponding law in that country
o Exchange of information for the prevention of same
o Seeking or providing of assistance or evidence in respect of any such offence
o Transfer of property relating to any such offence

Contracting State means any country or place outside Pakistan in respect of which arrangements have been
made by FG with the Government of such country through a treaty or otherwise
 Ch # 23: Anti Money Laundering
Arrangements for processes and assistance for transfer of accused persons (Sec 29)
• Where a Court desires that following summons or warrants issued by it shall be
served or executed at any place in any contracting State, it shall send these in
duplicate in such form, to such court, judge or magistrate through such authorities as
FG may specify in this behalf
o A summons to an accused person;
o A warrant for the arrest of an accused person;
o A summons to any person requiring him to attend and produce a document; or
o A search warrant,

• Where a Court has received any such summons or warrant from a contracting State,
it shall cause these to be served or executed as if it were a summons or warrant from
a local court.

• Where a prisoner is transferred to a contracting State, Court or FG may impose any

conditions deemed fit.

• Where a prisoner is transferred to Pakistan, Court shall ensure that conditions subject
to which prisoner is transferred to Pakistan are complied with and such prisoner shall
be kept in such custody subject to such conditions as FG may direct in writing.
 Ch # 23: Anti Money Laundering
Letter of Requests (Sec 27, 28 & 31)

- Request for Evidence

• If investigating officer or any officer superior in rank believes that any required
evidence may be available in any place in contracting State, he may, with prior
permission of the head of that investigation agency, issue a letter of request to a
court or an authority in contracting State competent to deal with such request to:
o Examine facts and circumstances of the case; and
o Take such steps as he may specify in such letter of request.
• Letter of Request shall be transmitted in such manner as FG may specify.

• Where a similar letter of request is received by FG from a court or authority in a

contracting State; FG may forward such letter of request to Court or to authorized
officer/authority as it thinks fit for execution of such request in accordance with this
Act or, in the manner sought by the contracting state.
 Ch # 23: Anti Money Laundering
Request for Attachment, seizure and forfeiture of property
• If the investigating officer has made an order for attachment of any property (u/s 8)
or where court has made a confirming order on it (u/s 9) and such property is
suspected to be in a contracting state, Court (on application by investigating officer)
may issue a letter of request to a Court or an authority in the contracting state for
execution of such order.

• Where such a letter of request is received by FG from a court in a contracting State,

FG may forward such letter of request to investigating agency, as it thinks fit, for
execution in accordance with this Act or in the manner sought by contracting state.
• FG may also direct any investigating agency to take all steps necessary for tracing
(determining the nature, source, disposition, movement, title or ownership of
property) and identifying (includes establishment of a proof that property was
derived from, or used in, commission of an offence u/s 3) such property.