Pakistan has adopted many money laundering laws so that we are compliant. But it took us too long such that first we went on their greylist, and then we legislated actions so that we were removed. A recent glaring violation was Habib Bank’s actions in the New York bank.
Though it’s a very good, serious bank, but its New York branch made serious mistakes and they were fined over $200 million in the US. Money was channelled into HBL from Saudi Arabia, from one of the banks there which was already being investigated for money laundering issues.
Some of the money under question is purportedly that of Mr. Nawaz Sharif related to Azizia Steel Mill, that went from HBL’s New York branch to Standard Chartered Bank in Lahore.
For the FATF members, these kinds of stats show that these are not necessarily individual violations but maybe systematic violations, if so they put us on a watch list. As long as, you are in the greylist what happens is that every time Pakistani banks deal with any bank, there will be far great scrutiny.
They might charge you more for that financial transaction because of the greater administration involved. Second, international banks which are operating in Pakistan, they will be afraid of being used for money laundering or another crime – despite how diligently they may check everything, then they would be frightened of getting caught up in something and getting fined.
Western banks-HSBC and other EU banks have been fined hundreds of millions/billions for such errors. Given the size of the fine, the international banks could start thinking what is the point of operating in Pakistan.
The benefit of operating in Pakistan will be only a few hundred million dollars, versus potential fines of billions. They might decide to stay out of Pakistan. There was a time when we had many international banks. Since we were on the greylist previously, they thought, cost of doing business in Pakistan is very high.
If that happens again it reduces Pakistan’s integration with the global banking system. It impacts international trade, capital in and out, investment overall it affects the international infrastructure of economic growth.
On the other hand, let me also say, if I was a very suspicious person, I would think that PML-N government-Nawaz Sharif and Ishaq Dar in last 2 to 3 years, they deliberately ignored all this, when this was developing, it did not develop all of sudden in the meeting. Pakistan knew that FATF team was coming. If they had taken action, it could have been averted to save Pakistan.
But, putting Pakistan in such a difficult position, after it has been very heavily indebted with deliberate policies of Dar and Nawaz. They have put Pakistan at the mercy of the international creditors whose favourite is Nawaz, they want people like him, who are pro-India, anti-Army, I think they have played into creating conditions, where the West could squeeze us and have leverage over Pakistan. Pressure will be to take it easy on politicians who are favourites of the West. This is the policy by which pro-west, anti-Army parties benefit.
Dr Zubair former Minister of Commerce, formerly on the staff of IMF, an international consultant to WB, ADB, former member National Finance Commission, Board of SECP, currently CEO of 01 natural mineral water, Pakistan’s only internationally certified natural mineral water.