market which have been gradually phased out in collaboration with the federal government. the measure is helping the government ’ s efforts towards documentation of the economy. i would urge upon the leaders of the banking community present here, to avail this opportunity of learning from the international and regional experiences and highlight concerns, if any. your involvement is vital for success of the seminar and the subject matter itself. we are fortunate to have with us today resource persons who are professionals of international repute. at the same time, state bank, in its capacity of regulator, welcomes suggestions and recommendations for improving regulatory and supervisory systems for a clean and healthy banking sector. in conclusion, i would like to acknowledge that the prime minister ’ s presence has provided us tremendous support and confidence. this is reflective of the government ’ s resolve and priority in tackling the issues of money laundering and terrorist financing. i would like to acknowledge the support and cooperation of world bank and imf in hosting this seminar.

ishrat husain : seminar on anti - money laundering welcome speech by mr ishrat husain, governor of the state bank of pakistan, at the anti - money laundering seminar, islamabad, 29 - 30 march 2005. * * * mr. prime minister, distinguished guests, ladies and gentlemen : good morning. i am honoured to welcome you all to this international seminar on anti - money laundering. i am grateful to the prime minister for taking time out of his busy schedule and inaugurate this seminar. i would like to extend a special welcome to the foreign visitors and wish them a pleasant and productive stay in our country. the topic of the seminar is of great importance in today ’ s world. one of the main objectives of this seminar is to discuss the core issues, which significantly involve financial sector in the fight against money laundering and terrorist financing. i hope the seminar comes up with practical suggestions for effective tackling of money laundering and terrorist financing. while the speakers would be highlighting the technical aspects of money laundering and terrorist financing, i would like to mention a few general observations about the menaces. the process of laundering dirty money by way of placement, layering and integration is harmful for each and every segment of the society. its ill effects on society, institutions and governments have been enormous. the tainted money adversely affects productive sectors of the economy in multifarious ways. the financial sector is particularly hurt if used for laundering of ill - gotten proceeds. the adverse consequences for financial institutions include reputational risk, operational risk, legal and concentration risks. it costs the financial institutions, in the following ways : • loss of profitable business • liquidity problems through sudden withdrawal of funds • termination of correspondent banking facilities • investigations costs and fines / penalties • assets seizures • loans losses • use of senior management ’ s time in doing damage control. • declines in the stock value of the financial institution concerned. society, as a whole, bears the costs of money laundering in multiple ways. unchecked money laundering enables criminals to enjoy the profits of their crimes who in turn commit more crimes. when there are more frauds and robberies in banks, depositors will receive less return on their deposits and will have to pay high rates on their loans. when public projects are inflated by corruption, citizens have to pay in the form of more taxes. these acts further distort equitable distribution of wealth and, hence, increase in the incidence of poverty. terrorism in its all forms