DEMARCHE ON AML BILL DELIVERED TO GOP

UNCLAS ISLAMABAD 003217

SIPDIS

SENSITIVE
SIPDIS

STATE FOR SCA/PB, EB/OMA DHAVILAND, EB/ESC LLAMBERT AND SCA/RA
MURENA
TREASURY FOR SSEGAL, PDERGARABEDIAN AND ASHARMA
COMMERCE FOR ANESA/OSA
JUSTICE FOR LSAMUEL
WARSAW FOR RSEAMAN
ABU DHABI FOR BMULLINAX

E.O. 12958: N/A
TAGS: KTFN EFIN PTER ECON PREL PK
SUBJECT: DEMARCHE ON AML BILL DELIVERED TO GOP

REF: STATE 95647


1. (SBU) Summary: On July 16 EconCouns delivered reftel demarche
to Muhammad Javed Malik, Additional Secretary, Ministry of Finance
and Nuzhrat Bashir, Joint Secretary for Banking, Ministry of
Finance. EconCouns pointed out the extensive amount of time Pakistan
has been working on passing Anti-Money Laundering (AML) legislation
and the possible repercussions if the legislation is not passed in a
timely manner. Malik assured her the AML bill would be passed out
of the Standing Committee and on to the full National Assembly soon.
Subsequently, the bill was reported out of the sub-committee and
back to the Standing Committee on July 17. Ministry of Finance
expects "smooth sailing" through the National Assembly, although
there is no legislative timetable. EconCouns also brought up the
importance in signing and ratifying the U.N. Convention Against
Terrorist Financing. Malik stated that Pakistan was 83 percent in
compliance with the U.N. Convention. End Summary


2. (SBU) EconCouns met with Muhammad Javed Malik, Additional
Secretary, Ministry of Finance and Nuzhrat Bashir, Joint Secretary

SIPDIS
for Banking, Ministry of Finance on July 16 to deliver reftel
demarche, highlighting serious ramifications for Pakistan if an AML
bill is not passed soon. Malik assured EconCouns passing this bill
was a high priority of the GOP and that the sub-committee now
reviewing the bill would be passing it to the Standing Committee
before the end of the week. (Note: the sub-committee approved the
bill and passed it to the Standing Committee on July 17. The
Standing Committee should meet in the next few days to review the
bill. End note). EconCouns also reminded Malik of the importance
of Pakistan signing and ratifying the U.N. Convention Against
Terrorist Financing. Malik replied that Pakistan is already 83
percent in compliance with the convention.


3. (SBU) Although Malik expressed concern that investment will
decline because investors will be concerned that their transactions
are being scrutinized, he recognizes that the consequences of not
passing the legislation are worse. He explained that because the
government party has the majority in the National Assembly, once the
bill comes to a vote there, it will be passed. EconCouns also
pointed out that the Asia-Pacific Group would be meeting in Perth
July 23 and that it considered its recent visit to Pakistan less
than satisfactory. We also reviewed possible consequences, should
the GOP not pass AML quickly. Malik was aware of possible FATF
actions, commenting that the GOP planned to send a robust delegation
to Perth, including the Governor of the Central Bank. He fully
understood that the GOP would be criticized in Perth.


4. (SBU) In an effort to widen our net and increase pressure on
the GOP, we discreetly raised our concerns about Pakistan's slow
enactment of the AML in Econ Counselor's courtesy calls on the IMF
ResRep and Citibank. The IMF ResRep commented that enactment of AML
was part of the 2004 IMF facility, and he was surprised that the
legislation had not yet been enacted. He promised to approach the
Ministry of Finance as well. Citibank expressed its concerns and
offered to raise the issue through its channels. The Ambassador has
also raised AML in her courtesy calls with the Minister of Commerce
and the Finance Advisor to the Prime Minister.

Patterson