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Petitioner: MISBAH KARIM and others VS Respondent: FEDERATION OF PAKISTAN through Secretary JUDGMENT
Court Name: Sindh High Court Judge(s): Ahmed Ali M. Shaikh, Muhammad Karim Khan Agha Title:MISBAH KARIM and others vs FEDERATION OF PAKISTAN through Secretary
JUDGMENT
Reported As: PLD 2016 Sindh 462 Result: Petitions dismissed Judgment JUDGMENT ' MOHAMMED KARIM KHAN AGHA, J.--By this common order, we intend to dispose of the above petitions which revolved around similar points of law, whereby the petitioners being aggrieved and dissatisfied with the Federal Investigation Agency (FIA) enquiry No,31/2015 dated 30.11.2015 whereby in effect the FIA was investigating offenses under the Anti Money Laundering Act 2010 (AMLA), the Foreign Exchange Regulations Act 1947 (FERA) and various sections of the P.P.C. Against the petitioners (FIA enquiry) as well as order dated 07.12.2015 passed by the learned Sessions Judge, South Karachi which allowed the FIA during the course of the FIA enquiry to call for the record of various banking details relating to the FIA enquiry (the impugned order) and had prayed that the FIA enquiry be declared as illegal, unlawful and quashed along with any other proceedings initiated thereto and to set-aside the impugned order. 2. The petitioners further prayed that the respondents be restrained from calling for any personal record of the petitioners Without the permission of the Court and/or taking any coercive action against the petitioners, without placing the record before this Court. 3. The brief facts of the case as gleamed from the petitions are that based on spy information the FIA opened an inquiry No, 31/2015 dated 30.11.2015 whereby in effect the FIA was investigating offenses under the AMLA, the FERA and various sections of the P.P.C. Against the petitioners and during the course of his investigation the Inspector/E.O. Of FIA moved an application under section 94 Cr.P.C. To the learned Sessions Judge, Karachi South for an order/permission to obtain the relevant documents/record from various banks and accounts through which allegedly money
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laundering had taken place which had caused heavy loss to the Government Exchequer which application was allowed through the impugned order. Such bank accounts in the impugned order were allegedly maintained or associated with some of the petitioners in the name of different persons in different banks whereby illegal credit/debit had been made under fake signatures from the date of opening of the accounts mentioned in the impugned order. 4. The Enquiry Officer had requested for issuance of direction to the Head of ompliance/Incharge, of the Banks where the aforesaid accounts were maintained, to supply/provide the account opening forms, SS Cards, complete bank statements, debit/credit vouchers and other relevant documents in order to assist him with the FIA enquiry. 5. It is contended by the learned counsel for the petitioners (all of whom were/are associated with the Pakland Group of Companies in one way or another) that they are innocent of any wrong doing and have been falsely implicated in the FIA enquiry with mala fide intention of the FIA officials just to show their efficiency and acting as cronies of private persons against whom civil litigation is pending and that the impugned order is illegal and liable to be set-aside as the petitioners are not involved in the said allegation of signing of any forged/fake documents and in fact the 13 alleged lands which are part of the FIA enquiry are and have always been in the name of the respective companies and not in the name of the petitioners. 6. They further contended that many cases are sub judice before this Court in relation to the allegation of misappropriation of lands and it is strongly believed that petitioners opponent has attempted to circumvent the civil, proceedings, where no relief could be found, with the sole malicious intent to pressurize, malign and coerce the petitioners. 7. So far as the second allegation of money laundering is concerned it is submitted that the FIA enquiry violates the core principles of Section 3 of the AMLA wherein it has to mandatory establish that the money which is being looked into are proceeds of a crime. Furthermore, there is grave violation by the respondents of sections 6 and 7 of the AMLA which stipulates that only the Financial Monitoring Unit (FMU) of the State Bank of Pakistan (SBP) is empowered to first inquire into a potential case of money laundering and in the event it is of the view that an act of money laundering may have taken place it would send all the Suspicious Transaction Reports (STRs) received from the financial institutions along with all necessary material to the investigation Agency duly appointed under Section 2(j) of the said Act, which procedure was not followed in the instant case and thus the FIA enquiry was without lawful authority especially as per settled law that an act could only be done in the manner prescribed by law as was held in the case of Muhammad Anwar v. Mst. Ilyas Begum (PLD 2013 SC 255). In essence it was submitted that the FIA had no jurisdiction or legal authority to carry out the inquiry in the manner in which they were so doing which had to be initiated by the FMU not by the FIA on their own motion and even otherwise the FIA had no power to investigate into the actions of private individuals under the FIA Act 1974 (FIA Act) and in this respect the petitioners placed reliance on the Cases of Waqar Ahmed V. FIA and others dated 27-02-2014 arising out of W.P 3223P /13 and Hamza Shabaz Sharif v. Federation of Pakistan (PCr.LJ 1999 1584). 8. With regard to the impugned order learned counsel for the petitioners submitted that the order had been passed by the concerned judicial officer in violation of Section 94 Cr.P.C. Since the FIA enquiry was only at the inquiry stage and not the investigative stage and since the judicial officer could only pass an order under Section 94 Cr.P.C. If the investigation stage had been reached the impugned order had been passed without lawful authority. 9. Learned counsel for the petitioners further contended that the rights of the petitioners under Article 13 of the Constitution in terms of self-incrimination would also be violated if the petitioners were compelled to make statements against themselves. In this respect reliance was placed on the case of Muhammad Siddique,v. State (PLD 1983 FSC 173).
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10. On the other hand learned Additional Attorney General and Standing Counsel have contended that the FIA enquiry has been carried out in accordance with the law and the impugned order does not warrant any interference which has been rightly passed in accordance with law and thus they argued that the petitions be dismissed. In particular they emphasized that the FIA had independent jurisdiction to investigate cases of money laundering and was not dependant on receiving reports from the FMU in this respect. 11. We have carefully perused the record, considered the relevant law and the submissions (both oral and written) of learned counsel for the parties and the authorities cited by them at the bar. 12. There appear to us to be two main legal issues arising out of this petition: (a) Whether the FIA can of its own accord inquire/investigate the offense of money laundering without receiving a request from the FMU, which in essence deals with the question of whether the FIA enquiry is lawful and (b) Whether the judicial officer had the power to order various banks to provide certain banking documents at the inquiry stage to the FIA, which in essence deals with the question whether the impugned order had been lawfully passed. 'Turning to the first question of whether the FIA can of its own accord inquire/investigate the offense of money laundering without receiving a request from the FMU. 13. At the outset we are of the view that it is irrelevant whether or not the AMLA is mentioned in the schedule to the FIA Act or not. This is because the FIA has specifically been made an investigating agency under Section 2 (j) of the MLA which reads as under: ' Section 2(j) "Investigating or prosecuting agency" means the National Accountability Bureau (NAB), Federal Investigation Agency (F.I.A.), Anti-Narcotics Force (ANF) or any other law enforcement agency as may be notified by the Federal Government for the investigation or prosecution of a predicate offence; (bold added) 14. We are fortified in our view by the Peshawar High Court Divisional Bench Decision in the case of Waqar Ahmed v. FIA and others dated 27-02-2014 arising out of W.P. 3223P /13 whereby it was held as under: "Para.6. First of all we would like to resolve the question of jurisdiction and competence of the FIA to investigate the case registered under Anti-Money Laundering Act, 2010. Originally this was promulgated through Ordinance as Anti-Money Laundering Ordinance 2007 (XIV of 2007) which was made part of the Schedule as Item No,28 of Federal Investigation Act 1974. However, as it was not made Act of' the parliament, so it died his natural death on expiry of its statutory period. Later on Anti-Money Laundering Act, 2010 (VII of 2010) was promulgated which has not been made pari of the Schedule and rightly so because it has self contained authorization appearing in Section 2(J) of the ibid Act which defines the investigating/prosecuting Agency. In this definition clause, beside National Accountability Bureau and Anti- Narcotics Force, Federal Investigation Agency has also been made part of the investigation and prosecution. As such the FIA is competent to investigate the matter and objection raised by the petitioner is repelled." (bold added) 15. Even otherwise it appears that the Federation through Notification dated 27-03-2010 had inserted the AMLA in the schedule of the FIA Act. 16. It was next contended by the petitioners in terms of the FIA's jurisdiction that since this was a private dispute and did not involve any Government officials or institutions the FIA were debarred from investigating into the matter under FIA Act. Reliance was placed on the case of Hamza Shabaz Sharif v. Federation of Pakistan 1999 (PCr.LJ 1584). 17. The aforesaid case was decided in 1999 before the AML Ordinance 2007 and AMLA and as such we consider it distinguishable on the ground that the AMLA has specifically given the FIA power to investigate in cases falling within the purview of the AMLA under the provisions of the AMLA. Since
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the AMLA will also encompass private persons (who are most likely to fall in its net) as well as Government officials we are of the view that the FIA has been given by the AMLA specific powers to investigate private individuals in the case of money laundering. To exclude private persons from the scope of the FIA investigation in our view would be both illogical and contrary to the intention of the legislature when the scheme of the AMLA is considered. For example, if the FMU referred a Suspicious Transaction Report (STR) and all relevant in-formation collected pursuant to it to the FIA for further inquiry would the FIA be debarred from investigating if the STR and associated information concerned a private person as opposed to a Government official? In our view it would not and as such this contention is misconceived. 18. Even otherwise the offence of money laundering could be perceived as being an offense against the State/Society especially if it concerned the non-payment of duties, taxes which may fall within the domain of the Ministry of Finance. The petitioners' argument since the passing of the AMLA in our view has failed to appreciate that the law must move with the times. In 1999 no offense of money laundering existed in Pakistan. Today such an offense does exist and the offense itself is not only a very menacing one but also a transnational crime. Thus in order to combat it the FIA, who have the required expertise, have been specifically empowered, along with other specialized agencies, to investigate it through the AMLA whether it concerns a private person or a Government official. Today the FIA is investigating many white collar crimes which do not necessarily involve Government officials. For example the axact case and the AKD case. In any event we are not bound by the judgment of the Hon'ble Lahore High Court which is only of persuasive value and with utmost respect and deference we find that in the year 2016 and the recognition of the growth and menace of money laundering and the presence of the AMLA we cannot agree with the same. The AMLA is also a special law which will prevail over the FIA Act in so far as the two Acts are inconsistent. 19. As such in our view the FIA can investigate alleged cases of A money laundering by private individuals under the AMLA. 20. As to the contention that as civil proceedings are already pending no criminal action can be taken in our view this contention is of little significance as it is trite law that both- civil and criminal proceedings can run in parallel. Besides which learned counsel for the petitioners did not place any document on record to show that the subject matter of the FIA enquiry was subjudice in any civil proceedings. 21. Money laundering is defined in Section 3 AMLA as under: "Section 3. Offence of money laundering.---A person shall be guilty of Offence of money laundering, if the person:- (a) Acquires, converts, possesses, uses or transfers property (as defined in S.2 (r) AMLA), knowing or having reason to believe that such property is proceeds of crime ( as defined in S.2 (q) AMLA); (b) Conceals or disguises the true nature, origin, location, disposition, movement or ownership of property, knowing or having reason to believe that such property is proceeds of crime; (c) Holds or possesses on behalf of any other person any property knowing or having reason to believe that such property is proceeds of crime; or (d) Participates in, associates, conspires to commit, attempts to commit, aids, abets, facilitates, or counsels the commission of the acts specified in clauses (a), (b) and (c). 22. It is apparent from the definition that the offense of money laundering will only be attracted if the money's, assets, property etc are acquired through the proceeds of crime e.g. Corruption, extortion etc and there is an attempt to in effect hide the illegal source from where the funds came. 23. It therefore appears self-evident in our view that an inquiry/investigation needs to be made before such a conclusion can be reached. For example, a person may admit to acquiring money through corrupt activities and putting that money into a property in order to disguise the origins of
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the funds. Thus, a case of money laundering is made out. The so called predicate offense of corruption is present (the relevant predicate offenses which will attract the AMLA are set out in the schedule to the AMLA which are mainly serious criminal offenses under the P.P.C. And ATA) and so to the attempt to hide the corruption money by using it to purchase a property. 24. Most of such cases of money laundering however are not as straight forward. Money laundering is a sophisticated white collar crime which is notoriously difficult to prove as various mechanisms such as the creation of "off shore companies" etc have been used to hide the illegally acquired money often in other person's names etc. Which may attract the AMLA. Such investigations often require the use of highly specialized asset tracers and forensic audit to uncover whether any of the funds in the various off shore accounts are legitimate or not. 25. In such complex investigations where there are no documents to hand the logical starting point is often to monitor the persons or companies bank accounts. Thus, if a suspicious transaction is found in a bank account attempts can be made to see if it has arisen on account of proceeds of crime and as such would amount to a predicate offense as defined under S.2(s) AMLA so as to bring it within the purview of the AMLA. The point is, in our view, that an investigation under AMLA is not precluded because a predicate offense has not already been found. The scheme of the AMLA through the FM allows the FMU the ability to identify a suspicious transaction and then work back ward to see if the suspicious transaction may have arisen out of proceeds of crime which are the fruits of a predicate offense which may then bring it within the ambit of the offense of money laundering and then pass on such information to the investigative agency under the AMLA to follow up on and potentially make a case of money laundering. Of course, not all suspicious transactions will lead to the offense of money laundering having been committed as often the account holder may be able to justify that the transaction has come from a legitimate source of funds. 26. In this respect for this very purpose the FMU has been established by virtue of Section 6 AMLA. Section 6(4) (a), (b), (c), (j) and (k) seem most relevant for the present purposes and are set out below for ease of reference: "S.6 (4) The FMU shall exercise-the following powers and perform the following functions, namely:- (a) To receive Suspicious Transactions Reports (STRs) and CTRs from financial institutions and such non-financial businesses and professions as may be necessary to accomplish the objects of this Act. (b) To analyze the Suspicious Transactions Reports and CTRs and in that respect the FMU may call for record and information from any agency or person in Pakistan (with the exception of income tax information) related to the transaction in question. All such agencies or persons shall be required to promptly provide the requested information; (c) To disseminate, after having considered the reports and having reasonable grounds to suspect, the Suspicious Transaction Reports and any necessary information to the investigating agencies concerned as described in clause (j) of section 2 (j) To engage a financial institution or an intermediary or such other non-financial businesses and professions or any of its officers as may be necessary for facilitating implementation of the provisions of this Act. The rules or regulations made hereunder: and (k) To perform all such functions and exercise all such powers as are necessary for, or ancillary to the attainment of the objects of this Act, (bold added). 27. The system however seems to be dependant on Section 7 AMLA which provides the procedure and manner for furnishing information by the financial institution (which as per S.2 (f) are largely any kind of institution which is involved in the financial services industry e.g. Banks) and other non- financial businesses and professions (which are generally persons dealing with areas where
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proceeds of crime can be hidden e.g. Jewelers , estate agents or assist in the same i.e, professionals such as accountants) which for ease of reference is set out as under: "Section 7. Procedure and manner of furnishing information by the financial institution or reporting entities.--(1) Every financial institution shall file with the FMU, to the extent and in the manner prescribed by the FMU, Suspicious Transaction Report conducted or attempted by, at or through that financial institution if the financial institution and reporting entity knows, suspects, or has reason to suspect that the transaction or a pattern of transaction of which the transaction is a part:- (a) Involves funds derived from illegal activities or is intended or conducted in order to hide or disguise proceeds of crime; (b) Is designed to evade any requirements of this section; or (c) Has no apparent lawful purpose after examining the available facts, including the background and possible purpose of the transaction; or (d) Involve financial terrorism. Provided that Suspicious Transaction Report shall be filed by the financial institution or reporting entity with the FMU immediately but not later than seven working days after forming that suspicion. (2) Any other Government agency, autonomous body or regulatory authority may share intelligence or report their suspicions within the meaning of suspicious transaction report or CTR to FMU in normal course of their business and the protection provided under Section 12 shall be available to suds agency, body or authority. (3) All CTRs shall, to the extent and in the manner prescribed by the FMU, be filed by the financial institutions or reporting entities with the FMU immediately, but not later than seven working days, after the respective currency transaction. (4) Every reporting entity shall keep and maintain a record relating to Suspicious Transactions Reports and CTRs filed by it for a period of five years after reporting of transaction under subsections (1), (2) and (3). (5) The provisions of this section shall have effect notwithstanding any obligation as to secrecy or other restriction on the disclosure of information imposed by any other law or written document. (6) Notwithstanding anything contained in any other law for the time being in force, any Suspicious Transactions Reports required to be submitted by any person or entity to any investigating and prosecuting agencies shall on the commencement of this Act, be solely and exclusively submitted to FMU to the exclusion of all others. " (bold) 28. As can be seen from Section 7 almost the entire potential of money laundering investigation will turn on whether the financial institution spots a so called suspicious transaction since the other reporting entities are unlikely to report little, if anything. If the financial institution fails to spot or recognize or considers that a transaction is not suspicious and fails to report it to the FMU then the FMU is powerless to follow up on the suspicious transaction since it would never have been made aware of it. The whole system of the FMU and its role in tracking down cases of money laundering is therefore in our view dependant on the vigilance of the financial institutions which may very well take a larger perspective/benefit of doubt view before reporting any of its clients for carrying out suspicious transactions. This is because to report on customers/clients may lead to the loss of present as well as future business for the concerned financial institution not withstanding Section 33 AMLA which concerns sanctions for those financial institutions which fail to report suspicious transactions under Section 7 AMLA 29. The question under these circumstances is whether there is any room for any other agency on its own initiative to look into banking transactions which may be connected with money laundering under the AMLA.
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30. According to the petitioners this is not possible mainly on account of Section 7(6) which as mentioned earlier reads as under: "Section 7(6) Notwithstanding anything contained in any other law for the time being in force, any Suspicious Transactions Reports required to be submitted by any person or entity to any investigating and prosecuting agencies shall on the commencement of this act, be solely and exclusively submitted to FMU to the exclusion of all others. " (bold added). 31 According to the petitioners this is a non obstante clause which ousts the jurisdiction of any other agency (including the FIA) in connection with inquiring into suspicious banking transactions which lies within the exclusive domain of the FMU. 32. This prima facie appears to be a compelling argument. In our view however the following considerations need to be taken into account: 1. That the system set up by the AMLA in spotting potential money launderers is imperfect as it is primarily dependant on the financial institutions which may enable many potential launderers to escape. Section 7(6) is also largely limited to banking transactions. There may well be non-banking transactions or other information which would alert an investigative agency such as the FIA to the potential offense of money laundering. 2. The gravity of the offense. Not only does money laundering spring out of an already committed serious criminal offense but if the money is laundered abroad on the purchase of say luxury properties that is money which has been illegally taken out of Pakistan's economy which it could have benefited from through job creation etc and has thereby damaged the Country's economy whilst benefiting another country's economy through illegal acts most often committed in Pakistan. This in our view is a crime against society and all means and measures must be taken to prevent money laundering and its perpetrators. 3. The FIA has been named as an investigating agency under the AMLA and has expertise investigating financial crime and wide investigative powers. 4. Information regarding potential money laundering is not confined to suspicious banking transactions e.g. An informant may come forward and inform the FIA about a person or company backed by reliable/credible material which is…
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