and facets is one of the greatest challenges of today ’ s world. one of the key measures to check terrorism is to choke of financial resources flowing toward perpetrators of terrorist acts i. e. counter finance terrorism. terrorist financing is in a way a case of “ reverse money laundering ”. in money laundering, crime precedes the process of laundering whereas in terrorist financing clean or dirty money is pooled to support a violent act in future. the tackling of the issues is by no means an isolated activity. it needs coordinated effort of host of stakeholders including financial institutions, regulators, law enforcement agencies and active involvement of host of other government functionaries to frustrate money laundering and terrorist financing. however, financial sector is believed to be at the core of the problem. let me briefly mention some of the steps which state bank of pakistan has taken to prevent use of banking sector from crime proceeds. • introduced a comprehensive regulatory framework by issuing prudential regulations for banks / dfis. these regulations cover the necessary features of aml regime for financial institutions as required under fatf recommendations. implementation of these regulations is ensured through on - site examination and off - site surveillance. our inspectors specifically verify the adequacy of kyc policies and other antimoney laundering safeguards. • another major step is the replacement of money changers with properly regulated exchange companies, hence, formalizing the business of money changing and the underlying transactions. • state bank of pakistan has been instrumental in freezing bank accounts of proscribed entities and individuals as per unsc resolutions. report of freezing accounts is called from banks and proper record of frozen accounts maintained. • state bank of pakistan has signed mous with a number of central banks for exchange of information and expertise, which also covers the anti - money laundering and terrorist - financing areas. • the banks in pakistan were issuing traveller cheques in local currency called “ rupee travellers cheques ” ( rtcs ) in exceptionally high denomination of up to rs. 500, 000 which was not in line with the true spirit and purpose of traveller cheques. instead of using rtcs to meet the needs of travellers, the holder of these instruments often used them as a mode of settling undocumented transactions thereby, defeating the objective of the government of documentation of the economy. sbp, therefore, prohibited the issuance of rtcs in denominations exceeding rs. 10, 000 / - in may, 2002. • various kinds of bearer instruments were previously available in the

. there has been uneven or slow implementation of these reforms, there has been economic mismanagement but, at no stage, these policies were rejected, derailed or abandoned. the economic reforms act of 1992 is still in force after 12 years of its inception. the manifestos of all political parties subscribe to the same set of policies although their priorities, sequencing, phasing, points of emphasis are different and more nuanced. thus, there should be little fear in the minds of anyone about the reversal of these reforms and policies by any future government in pakistan. there have been some irreversible changes that have set in the country ’ s economic landscape that augur well from sustainability and continuity perspective. the parliament is expected to pass a legislation called fiscal responsibility and debt limitation law which will limit fiscal deficit and target reduction in debt - ratios every year. as fiscal indiscipline has been the bane of pakistan ’ s economic problems in the past, this particular initiative will restrain the successive governments from indulging in reckless spending and excessive borrowing. the country ’ s parliament rather than the imf will act as the watchdog on the government ’ s finances and it will be difficult for any government to deviate from this path unless there are cogent reasons to do so. fiscal transparency has also been entrenched as the federal and provincial governments are obligated to publish audited quarterly statements of accounts. these statements are available to the public at large and can trigger questioning of fiscal policy decisions taken by the government. the auditor general is an independent and constitutional position who submits an annual report to the public accounts committee ( pac ) of the national assembly on financial irregularities and the officials concerned are answerable to the pac for their actions and decisions. the central bank has been made autonomous and given constitutional protection. its affairs are supervised and controlled by an independent board of directors consisting of nine eminent members of stature drawn mainly from the private sector and having only one representative from the ministry of finance. the ministry ’ s representative does not enjoy any veto power and all decisions are taken by a majority vote. neither the governor nor the board members can be removed arbitrarily by the federal government. the state bank of pakistan ( sbp ) has acquired core competencies and technology to perform its functions and submits quarterly and annual reports to the parliament on the state of economy regularly. similarly, the securities and exchange commission of pakistan ( secp ) and the central board of revenue (