Anti-Money Laundering Act, 2010

   

                  Anti-Money Laundering Act, 2010 (1)

Anti-Money-Laundering-Act-2010

Money laundering:

 General definition:

Money laundering is the practice of integrating the proceeds of crime into the legitimate mainstream of the financial community by concealing its origin.

In simple words: Money Laundering is the process by which illegal funds and assets are converted in to legitimate funds and assets.

 (Making dirty money appear to be legitimate) 

Term money laundering History:

Term money laundering coined in 1920 during the gangster history of American era. Al Kapoon was the head of the gang. They were actually drug dealers. Because the earned money was the proceed of crime so to legitimate his black money he started the business including the laundries. So it is said that the term money laundering was born.

 

Stages of money laundering/how money laundering is done?

Stages-of-Money-Laundering

There are following three stages of money laundering:

 1. Placement 2. Layering 3.Integration

1. Placement:

Illegal funds or assets (which are the proceeds of crime), are brought into the financial system or used in the purchase of the assets. This is the most risk area for the criminals.

2. Layering:

Use of multiple accounts, banks, corporations, trusts, countries to disguise or conceal the origin. This distances the dirty money from its source by a series of transactions.

 

3. Integration:

Laundered funds are made available as apparently legitimate funds. He uses it in investments and purchases, so that the criminals can add it to their wealth. By this stage separating legal and illegal wealth is very difficult.

 

Scope/rationale of AML Act 2010

Scope-of-AML-Act-2010

There are following purposes of AML Act are described in the preamble:

●      Prevention of money laundering

●      Combating the financing of terrorism

●      Forfeiture of property derived from money laundering or financing of terrorism

●       For matters connected therewith or incidental thereto.

 

Offences of money laundering: u/s 3

 A person shall be guilty of offence of money laundering in following 4 cases: If the person

Case (a)

Acquires, possesses, uses, converts or transfers a property knowing or having reason to believe that such property is proceeds of crime.

 

Case (b)

Conceals or disguises the true nature, origin, location, disposition, movement or ownership of the property knowing or reason to believe that such property is proceeds of crime.

 

Case (c)

Holds or possesses on the behalf of any other person any property knowing or having reason to believe that such property is proceeds of crime.

 

Case (d)

Participates in, associates, conspire to commit, attempt to commit, aids, abets, facilitates or councils, the commission of the acts specified in clauses (a), (b), (c).

 

Note: 

Money laundering itself is separate and standalone offence. The conviction of an accused for the respective predicate offence shall not be required.

 Offence of money laundering can be proved through the indirect factual circumstances under article 27 of Qanun e shahadat order 1984.

Proceeds of crime: u/s 2(xxviii)

Meaning:

Any property derived or obtained directly or indirectly by any person from the commission of a predicate offence or a foreign serious offence. Property obtained in a result of commission of a predicate offence.

 

Predicate offence: u/s 2(xxvi)

Meaning:

An offence specified in the schedule of Anti Money Laundering Act, 2010.

 

Foreign serious offence: 2(xvi)

An offence if it is committed in any other country is also an offence in Pakistan would be considered as the foreign serious offence.

 

Ingredients or element of money laundering/

How to prove the offence of money laundering?

 

Ingredients-of-AML-Act-2010

There should be following ingredients:

1. Predicate offence / foreign serious offence

2. Proceeds of crime

3. Knowledge or reason to believe/ mensrea

 4. Commission of predicate offence/ actusrea.

 

Punishment / consequences for money laundering u/s 4

Punishments-for-Money-Laundering

The person who commits the offence of money laundering shall be punished with,

o Rigorous imprisonment:

 which shall not be less than one year and may extend up to 10 years.

o Fine: 

which may extend up to 25 million rupees in case of natural person. But in case of factual person or corporation it shall extend up to 100 million rupees.

 O Forfeiture of property: 

The property involved in money laundering or property of corresponding value.