The names of at least 400 Pakistanis‘shined’ in a story which was sponsored by an international consortium of investigative journalists in the bombshell Panama leaks in May this year. Some politicians as well as others who matter have since been calling for the prosecution of the alleged investors on the charges of tax evasion. According to the central bank of the country, the establishment of offshore companies by alleged Pakistanis is not illegal. However, money laundering and transactions for terrorist financing are serious crimes and the country’s banks should block transfer of money to the suspected destinations. The phenomenon of offshore companies is not new as the Swiss banks and earlier a defunct UAE bank were allegedly involved in money laundering and illegal transfer of money in violations of the local and international laws. The bank had been abolished and the Swiss authorities toughened the laws to stop their banks from stashing illegal money by corrupt elements from all over the world.
According to newspaper reports, no proper legislation had been made to stop money laundering before mid-1980s in the country. In 1989, a financial action task force was created by G7 countries to curb money laundering and the force was also mandated to stop terrorist financingin 2001. The country’s central bank has adopted stringent measures not only to curb money laundering but also terrorist financing. The concept of offshore companies is not illegal as Pakistan has itself established such companies in the country. However, the money laundering has come as a big challenge before the government. Despite establishing various organizations at provincial and national levels, corruption has been institutionalized in the country. What only needs to do is to stop flight of illegal money to other countries. As a matter of fact, illegal money is generated in the country and it is also property of the country. Therefore, the government should provide investment opportunities and investors should not be asked their source of income to keep the money within the country.
Though it is wrong on moral grounds to use dirty money in the country, but there is no way out. Otherwise, corrupt money will continue to generate and will continue to fly if the nation is not allowed to take benefit if its fair use in the country. After the narrative from the State Bank, it is difficult for the taxation authorities to investigate the Pakistani residents having investment in the offshore companies. Some argue that the Federal Board of Revenue and the Securities and Exchange Commission of Pakistan should launch formal investigations into the matter,but this will bring no good to the nation. However, the government can step up efforts to stop capital flight and create investment opportunities within the country.
