Money Laundering

Question 1

When a person is found guilty of Offence of money laundering?

Answer 1

A person is guilty of offence of money laundering if he knows (or having reasons to believe) that a property is proceeds of crime and still:
1.Acquire, converts, possess, use or transfer such property
2.Conceals the true nature, origin, location, ownership, movement of such property.
3.Holds or possess such property on behalf of any other person.
A person shall also be guilty if he participates, aids, or counsels to commit above acts.

Question 2

What is covered in definition or Financial Institution?

Answer 2

Financial Institution means any person who carries out any of following activity:
1.Accepting deposits, and Lending.
2.Leasing.
3.Insurance.
4.Money or Value Transfers.
5.Manage means of payments (including online payments) e.g. Debit and Credit Cards Electronic Money, Money Orders, Cheques, Bank Draft, Traveler’s Cheques.
6.Financial Guarantees and Commitments.
7.Business trading in:
a. Portfolio management.
b. Money market instruments,
c. Transferable securities
d. Investing and managing funds on behalf of others.
e. Safekeeping and administering cash or liquid securities on behalf of others.
f. Foreign exchange
g. Money and currency changing
h. Exchange, Interest Rate and Index Instruments
i. Commodity Futures Trading
j. Share Issue Services.
k. Intermediaries.
Examples include Banks, Master Card, Jazz-Cash, Easy-peasy, Western Union.

Question 3

Evidence of Offence of money laundering:

Answer 3

To proof offence of money laundering:

Knowledge or intent may be inferred from factual circumstances in accordance with Qanune-Shahadat Order, 1984.

Conviction of accused for respective ‘predicate offence’ shall not be required.

Predicate offence means any criminal offence by way of which proceeds used in money laundering were generated e.g. corruption, kidnapping, etc.

Question 4

Punishment for Money Laundering:

Answer 4

For Individuals: (i.e. natural person)

If a person commits money laundering, he will be liable of:

Imprisonment upto 10 Years (but not less than year).

Fine upto Rs. 25 million.

Forfeiture of property involved in money laundering (or property of equal value).

For Legal Persons; (i.e. company)

If a company commits money laundering, it will be liable of fine upto Rs. 100 million.

Any director, officer or employee of such legal person who is found guilty, shall be liable for same penalty as above for individuals.

Question 5

Electronic Fund Transfer.

Answer 5

“Electronic Fund Transfer” means:

transfer of funds, other than by cheque, draft or similar paper instrument.

which is initiated through Electronic Terminal (POS Terminal, Stored Value Card Terminal), ATM, telephone instrument, computer, magnetic medium or any other electronic device

to order, instruct, or authorize a Financial Institution to debit or credit an Account. EFT works without direct intervention of bank staff.

Question 6

“Electronic Fund” or “Electronic Money”:

Answer 6

It means:

money transferred through an Electronic Terminal, ATM, telephone instrument, computer, magnetic medium or any other electronic device

to order, instruct, or authorize a Financial Institution, or a Bank or other Company to debit or credit an Account.

, and includes:

monetary value which represents a claim on the issuer, and is stored in an electronic device or Payment Instrument. Such monetary value is issued on receipt of funds (not less than monetary value issued), and is accepted as means of payment by undertakings other than the issuer and

electronic store of monetary value on an electronic device that may be used for making payments or as may be prescribed by the State Bank;

Question 7

Designated Payment System

Answer 7

state Bank may designate a Payment System to be a Designated Payment System (DPS) by written rder, if necessary in the public interest.

Financial Institution, who is authorized (by State Bank) to operate a DPS is called “Operator.

considering whether to designate a payment system as DPS, State Bank may inspect the premises, equipment, books, accounts and transactions relating to PS.

Question 8

Operational Arrangements:

Answer 8

An operator of Designated Payment System (DPS) shall make following arrangements:

Rules and procedures setting out rights and liabilities of Operator and Participant.

Measures to ensure safety, security, operational reliability and contingency arrangements.

Rules and procedures for management of credit, liquidity and settlement risk (including time when a payment is instructed and settlement is final).

Criteria for participation in DPS.