- Cabinet dragging its feet?
The federal cabinet might have shot Pakistan’s chances of sidestepping FATF (Financial Action Task Force) grey-listing in the foot by refusing to approve a finance division summary to notify an investment and prosecuting agency under the Anti Money Laundering Act (AMLA) 2010, according to the press. It turns out that a statutory regulatory order, issued in June 2016, empowered the Directorate General Intelligence and Investigation (DGI&I) of Inland Revenue to proceed against tax evaders and money launderers. But the Lahore High Court (LHC) struck it down in January 2018 because it was issued without cabinet approval.
Heading cabinet discussion on the matter, however, PM Abbasi did not approve the notification, instead referred the matter to the law division for vetting, which will set the process back by months. That is particularly worrisome since this was one of the recommendations made by the Asia Pacific Group, and one of the promises Pakistan made so be spared the grey-listing. Miftah Ismail, heading to Washington not too long ago, hoped to gain some leverage because of proposed changes just like the one mentioned, but came back empty handed. Now, with an FATF team due in Pakistan at the end of the month, to assess progress, the government will cut a sorry figure because it prefers to go round in circles instead of straight forward. The PM’s actions appear all the more strange because in the 18 months that the DG I&I had been empowered, a good Rs10 billion were recovered against tax evaded money.
Interestingly, by dragging its feet cabinet has also put a question mark on the prime minister’s controversial tax amnesty scheme, which is already facing a hard time in the Upper House. Since it does not apply to funds related to crime and money laundering, and the DG I&I is suspended, the scheme could well be exploited by some to shift some shady money before the law is properly enforced. Landing in the FATF grey list will choke the economy and affect everybody, which is why the government should explain steps, like the cabinet’s delaying tactics, to the people before taking them.
