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| India-Pakistan |
| Illegal money |
| 2015-02-03 |
| IT is heartening that the interior minister wants to see a more strenuous effort against money laundering and terror finance, as well as hundi and hawala transactions. It would be more encouraging still if he had any ideas on how to strengthen these efforts beyond simply thumping his fist on the table and demanding action. In a meeting with the Federal Investigation Agency on Monday, the minister reportedly said he wanted stronger action against hundi and hawala operators, and âa strict watchâ on suspicious transactions that might be linked with terrorism. The number of suspicious transactions detected in the last year are indeed very low and a far more robust effort is required if the action against terrorists is to succeed. But does the minister know that hundi and hawala transactions are not even scheduled offences under the Anti Terrorism Act or the Foreign Exchange Regulation Act? Does he know that they become scheduled offences only under an ad hoc arrangement whereby a notification is issued every year by his own ministry? And does he realise that the laws and guidelines that require banks to identify suspicious transactions are very weak and ambiguous for the detection of terror-related transactions? The minister could put his own energies to better use by championing reform of the legislation under which hundi and hawala operators can be proceeded against, as well as reform of the laws and guidelines to facilitate the detection and reporting of suspicious transactions by banks. Detecting hundi and hawala transactions is still relatively easier, but tracking terror-related funds is going to require very careful coordination among various law-enforcement and regulatory bodies, as well as intelligence agencies. The interior ministerâs powers can be very useful in helping to bring about this coordination. A detailed list of individuals and entities whose financial activities need to be monitored must be created and then communicated to the banks. Banks need to be urged under threat of penalty to play a stronger role in tracking these individuals and entities on the list. Law enforcement can only begin once the architecture of a stronger detection and monitoring regime has been built. Demands for action without the necessary reforms risk creating unnecessary panic in the financial system as the law-enforcement agencies will be compelled to apprehend people without strong probable cause. We can only hope that the minister has feasible ideas on how to bring about these reforms. |
| Posted by:Fred |