38
59
2023
1682060078052_4027
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https://journal.aladwajournal.com/index.php/aladwa/article/download/475/384
https://journal.aladwajournal.com/index.php/aladwa/article/view/475
Waqf Trust Islamic Law Pakistan Islamabad Capital Territory Trust Act 2020 Financial Action Task Force
OPEN ACCESS الاضواء Al-Az̤vā ISSN 2415-0444 ;E 1995-7904 Volume 37, Issue, 57, 2022
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Critical analysis of newly promulgated “Islamabad Capital Territory Trust Act 2020” in nexus to FATF (Financial Action Task Force) Requirements
Jibran Jamshad Assistant Professor, Department of Law, The Islamia University of Bahawalpur / PhD Scholar BZU Multan
Hamid Mukhtar, (corresponding author) Assistant Professor School of Law, University of Okara, Okara
Kashif Mahmood Saqib Assistant Professor, School of Law, University of Okara, Okara
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Abstract | ||||
Background: Waqf is considered as an important and distinguished institutions of Islam. The involvement of huge money and its traditional history makes it more powerful than the western concept of Trust. In Pakistan, the topic gains more importance after Financial Action Task Force(FATF) enlisted the country into the grey list and required it to reform its laws specifically dealing with Waqf and Awqafs. The purpose of this research is to evaluate the historical background of Waqf in Pakistan. It traces the early laws passed during British Rule in India to deal with Waqf and relates it with the modern laws. The study critically analyzes the recently passed Islamabad Capital Territory Trust Act (ICTTA), 2020. After highlighting and describing the salient features of ICTTA 2020, the study then relates it to the guidelines provided by the FATF.This qualitative study depends upon the Primary and secondary data and its Desk Review. The newly promulgated ICTTA 2020 is a comprehensive piece of legislation that empowers the Government to efficiently control and manage the Waqfs. The study also concludes that strict implementation and spreading of ICTTA 2020 gradually to the whole country will suppress many immoral and corrupt practices in the Awqafs. |
KEYWORDS
Waqf, Trust, Islamic Law, Pakistan, Islamabad Capital Territory Trust Act 2020, Financial Action Task Force
Date of Publication: 29-06-2022
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Introduction
Philanthropy has great importance and a special place in Islam. The most distinguished feature of Islam which separates it from all other religions is the special emphasis on philanthropy, charity, and the condition of the poor. In Islamic World, Philanthropic foundations are commonly known as “Waqf” and its plural form is known as “Awqāf”. The term “Waqf” is of Arabic origin and it means to cause a thing to stop and standstill. This institution can be considered as one of the greatest achievements of Islam, as private property is furnished for charitable purpose in perpetuity with its benefits spent for that specific purpose. For many centuries, this system built magnificent architecture and served the society with its enormous wealth. Many Waqfs survived for centuries and some even millennium.1 One study suggested that the main characteristic of Waqf is its nature of voluntary charity characterized by perpetuity.2 Assets of Waqf cannot be disposed of neither its memberships are transferable only the benefits of Waqf can be used for a charitable purpose.
According to Sharia, a Waqf can be defined as a holding of an asset and using its benefits for righteous and philanthropist purposes,3 ultimately for the benefit of the ummah as a whole.4
Apart from few dissimilarities, English Trust and Waqf are almost the same.5 It was the Islamic concept of Waqf which inspired Medieval Europe for philanthropic endowment.6 Further, most of the Islamic scholars are of the view that the concept of Waqf played an important role in development of English Trust, whereas, Western scholars believed that English Trust has its roots in Roman and Germanic Laws.7 Abovementioned and many other scholars believe that the modern system of charity and social welfare in the western world are inspired form the Islamci Concept of Waqf.
Research Questions
This study will primarily focus on the Islamic concept of Waqf, Waqf Properties, and related laws in Pakistan. It will answer the following questions;
To trace the historical background of Waqf in Pakistan
To analyze the previous laws dealing with Waqf Properties in Pakistan
To critically examine The Islamabad Capital Territory Trust Act 2020
To evaluate the Islamabad Capital Territory Trust Act 2020 while keeping in view the guidelines of FATF for Pakistan
to suggest recommendations for further improvements regarding Waqf
Methodology
In this qualitative research, Primary and secondary sources are collected and analyzed. A comprehensive desk review of both Primary and Secondary sources is conducted to examine the topic of research. Primary sources consist of original statutes passed by the legislature. Secondary sources consist of other research articles, newspapers reports, and statistical data.
This study examined the newly promulgated law dealing with the Trusts. The salient features of this law are described in an easy and understandable style. This study analyzed the previous and repealed laws dealing with the matter. It also evaluates the link between guidelines given to Pakistan by FATF and the newly promulgated law.
Historical Background
Waqf and Awqaf have a brief history, it started even before the independence of Pakistan. In 1894, Privacy Council ordered that the Islamic Foundations to be examined charitable and religious organizations must be in Public Control and should not be under any private ownership. Therefore, Awqafs were separated from the Muslims private ownership and were considered as neither purely religious nor private entities but mixed endowments.8
Sir Syed Ahmad Khān, a prominent Islamic reformer, spoke for the restoration of Islamic Waqf in British India.9 Founder of Pakistan, Muhammad Ali Jinnah, pleaded in his address before the Indian National Congress in 1906 to restore right of private ownership of Islamic Endowments, which were under British control since 188710. Muhammad Ali Jinnah presented a Bill to Imperial Legislative Council in 1909 related to Waqf and 1911 he succeeded in passing the “Mussalman Wakf Validating Act 1913” which restored private ownership of Waqfs.11
After the Independence of Pakistan, the Waqf System preserved many characteristics of British Waqf also British era laws dealing with the Waqfs remain intact such as; The Punjab Muslim Awqaf Act 1951, The Qanoon-e-Awqaf Islami 1945, The North West Frontier Province Charitable Institution Act 1949 and Mussalman Waqf Act 1959.
The government of Punjab promulgated the West Pakistan Waqf Properties Ordinance 1959, which empowered the Government to remove Mutawallis involvement. In 1960, The Awqaf Ordinance and the West Pakistan Waqf Properties Rules gave complete control over Waqfs to the Government. It was like the nationalization of the whole Waqf properties all over Pakistan.
After these sweeping changes, Waqfs were controlled by the Provincial and Federal Governments and no longer under the control of Pirs, Mutawallis, Sajjadanashins, and other parasites who regularly misused them for anti-social and personal activities.12
The Waqf Properties Ordinance 1961, made the Administrator Awqaf all-powerful and these administrative replaced the Pirs and Mutawallis. All these Government actions annoyed those who were in power and lost their monopoly over Waqf properties. Many petitions were filed in the Supreme Court of Pakistan at that time.13
Council of Islamic Ideology (CII) criticized this aggressive stance of the State and declared that these confiscations were against the spirit of Islam. Federal Shariat Court examined the Waqf Ordinance 1979 along with all existing Acts and finally ruled that nationalization by Government is not against the Sharī’ah and hence validated all the confiscations of Government.
The Government’s policy of integration of waqfs and to reduce the autonomy of endowments and shrines proved successful but there was some dissent and illegal activities were performed in some places.14
In Pakistan, the Waqf and Awqaf gradually came under the strict control of the Government which was in direct contradiction to the Mussalman Waqf Validation Act 1913, presented and passed by the founder of Pakistan. In this process, the services and utilities provided by these Waqf properties disappeared but it also eliminated the illegal and misuse of these properties by Pirs and Mūtawallis.
Trust Act 1882
The Trust Act 1882 was passed by the British when they were the colonial ruler of India. The Trust Act 1882 is a comprehensive law that was passed to regulate Private Trusts and Trustees. The main aim of this law was to control and administer the Trusts all over India under the supervision of the Government.15 After independence, Pakistan adopted the Trust Act 1882 with minor amendments and it is being used to date.
Trust Act 1882 was a comprehensive law that deals with the creation, management, administration, revocation, and all other matters related to the Trusts. Although Islamabad Capital Territories Trust Act 2020 repealed it (to the extent of Islamabad only), yet many terms and ideas are used from the Trust Act 1882. The Trust Act 1882 was promulgated more than a century ago and was not designed to deal with the modern phenomenon of ill management;16 money-laundering and terror financing hence Government of Pakistan, under the pressure of FATF, replaced it with the Islamabad Capital Territory Trust Act 2020. The plan is to introduce this new law dealing with trusts all over the country in phases.
Islamabad Capital Territory Trust Act 2020
The purpose of this newly promulgated law is to enact an effective law for the administration, monitoring, and registration of registered Waqf (Trusts) within the territorial limits of Islamabad.
Its preamble stated that the Trust Act 1882 does not cater to effective administration, financial monitoring, and evaluation of the trusts. Islamabad Capital Territory Trust Act 2020, hereinafter will be referred to as ICTTA, 27 August 2020.
This law is among many other statutes recently passed by the Government of Pakistan to fulfill its obligation towards FATF (Financial Action Task Force) recommendations. ICTTA 2020 is enacted to stop the money laundering and misappropriation of funds by misusing the Waqf Properties.
What are Trust/Important Terms defined in ICCTA
The word trust is often used as a synonym of Waqf. This new law defined Trust as, “an obligation annexed to the ownership of property and arising out of the confidence reposed in and accepted by the owner or declared and accepted by him for the benefit of beneficiary”17. Trustee means any person who accepts the confidence of the author of the trust to the benefit of the beneficiary18. A Trust Property is defined as the subject matter of the trust; it may be movable or immovable property19. The important point to note here is that both moveable and immovable properties come under the definition of Trust Property under the ICTTA 2020. Hence, according to a study20 it may be averred that “a trustee is nominal, while the cestui que trust is the beneficial owner of the property.”
Author of the Trust is defined in this law as “a natural person who reposes or declares the confidence and assigns the property to the trustee for the benefit of the beneficiary.21” A beneficiary means the natural person who benefits the confidence of the trust22.
How Trust is Created:
A valid trust can only be created through an “Instrument of the Trust” which is defined as the instrument by which the trust is declared23. “A valid trust must be declared by a non-testamentary instrument in writing signed by the author of the trust or the trustee and registered or by the will of the author of the trustor of the trustee and its ownership is transferred to the trust”.24
For a trust to be valid the author of trust must fulfill the following conditions under ICTTA;
An intention on his part to create a trust
The purpose of the trust
The beneficiary
The trust-property
Transfer the trust property to the trustee
Section 5 of ICTTA states that every natural person is competent to create trust and it can also be created by a minor with permission of the principal civil court of original jurisdiction. Similarly, the ICTTA provided that every natural person can be a beneficiary of the trust, and every natural person capable of holding property can be the trustee of the trust.
Registration of Trust and Issue of Certificate
ICTTA made it compulsory for all trusts to be registered under this act with the Directorate of Labor and Industries, Islamabad Capital Territory. A trust shall provide the following information at the time of its registration;
Purpose
Author of Trust
Details of Trustees
Beneficiaries of Trust25
The director shall verify the content and particularly provided with the application through investigating or prosecuting agencies who shall submit their report to the director within 14 days26. Another important requirement for obtaining the certificate is that all moveable and immovable properties must be registered in the name of trust under the Registration Act 190827. Only after all these above-mentioned requirements are fulfilled, the director shall register the trust under this act and issue a certificate of registration to the trustee.
Powers of Director to refuse the Registration on Suspicious Activities
One of the most important conditions laid down by the FATF is to stop the misusing of Trust/Waqf for money laundering and terror financing in Pakistan. The ICTTA specifically laid down the conditions to fulfill those obligations.
At the time of registration, the Director can refuse to issue the registration of any Trust on the following suspicions;
If he believes that trust is created for some unlawful purpose and suspected to have criminal proceeds
If any member of the trust including author, trustees, or any other person exercising ultimate effective control over the trust is associated with proscribed organizations under the Anti-Terrorism Act 1997 or under the United Nations Security Council Act 1948
If the under consideration trust is a threat to national security, considered by the report of district intelligence coordination committee
If the author of trust, its beneficiary or trustee, or any other person representing trust fails to furnish complete details for registration28.
Further, this law empowers the Government to inspect the record of any trust at any time, and trust is bound to comply with such order.
Duties of Trustee under ICTTA
This law described the comprehensive details about the duties of the Trustee. Section 22 to 42 of the ICTTA specifically deals with the duties of the Trustee. Some of the important duties and liabilities of Trustee are;
It is the basic duty of the trustee to fulfill the purpose of the trust and to obey the direction of the author of trust.
The trustee must collect and hold all necessary information about the author of the trust, co-trustee, beneficiaries, and any other related person.
The trustee also has to protect the title or trust property by defending all such suits against the trust property.
The act made it obligatory for the trustee to take proper care of the trust property as a man of ordinary prudence would deal.
The trustee must remain impartial if there is more than one beneficiary of the trust.
A trustee is duty-bound to take measures to prevent any harmful and threatening act towards trust property.
A trustee is bound to keep clear and accurate accounts of the trust property and its income.
If the trust property consists of money, the trustee can invest it only in promissory notes, debentures, stock, or other securities of a Provincial or Federal Government.
Rights and Powers of Trustee under ICTTA
This law also gave certain powers to the Trustee so he can run the affairs of trust effectively. Some of the important powers and rights of the trustee are;
“A trustee is entitled to have in his possession the instrument of trust and all the documents of title if any relating solely to the trust property”.29
A trustee has also the right to reimburse himself all the expenses he incurred regarding the trust property or execution of the trust, benefits of the trust property, and protection of the beneficiary.30
A trustee can file an application in the principal civil court regarding the management and administration of trust property.31
“A trustee is entitled to have the accounts of his administration of the trust property examined and settled.32”
The trustee is also empowered to sell or buy the trust property under specific circumstances.33
Rights and Liabilities of Beneficiary under ICTTA
The beneficiary is the person who is entitled to the benefits of the trust. Under the ICTTA, the beneficiary has the following rights;
Beneficiary has the right to the rent and profits of the trust property.34
Where the beneficiary is competent to contract, he may require the trustee to transfer the trust property to him or any other person.35
A beneficiary has the right to inspect and take copies of the instrument of the trust accounts and any other related documents.36
A beneficiary is also entitled to transfer the beneficial interest but only if he is competent to do so under the trust.37
If the trustee has wrongfully bought the trust property, the beneficiary has the right to have property or retransfer it.
Removal of Trustee under ICTTA
Under this law, the Trustee holds a very important position. He is responsible for the running of day to day business of trust. The office of trustee is vacated by this death or by his discharge from his office. Section 83 of the ICCTA describes when the trustee may be discharged from his office. He can be discharged;
When trust is extinguished.
When he completes his duties under the trust.
By any means described in the instrument of trust.
By appointment of a new trustee under this law.
By consent of himself or beneficiaries.
By executive orders of the director.
By the order of the court.38
Appointment of New Trustee
There are certain conditions provided in this act for the appointment of the new trustee. This law provides the following reasons when the office of a trustee becomes vacant;
If Trustee dies.
If the trustee is absent from Pakistan for six months.
If the trustee leaves Pakistan for residing abroad.
If the trustee is declared insolvent.
If the trustee desires to be discharged or refuse to continue.
If the trustee becomes personally incapable to perform his duties in the opinion of the court.39
Hence when the office of a trustee becomes vacant a new trustee may be appointed in his place by the person nominated for that purpose by the instrument of trust. But if it is not possible to appoint the trustee regularly then the court can intervene and appoint the trustee. While appointing a trustee, the court must give regard to the wishes of the author of the trust, the interests of the beneficiaries, and the benefit of the trust40.
Revocation and Extinction of Trust
This law provides certain ways in which a Trust can be extinguished. Following are the instances when the “Trust can be extinguished;
A trust or waqf is legally finished after fulfillment of its purpose
The Director (which means Government) can also extinguish the trust if there are sufficient reasons to believe that the activities of the trust are a threat to national security
Trust is extinguished if Trust property is destroyed and it is not possible to fulfill the purpose of trust due to that destruction
When there is a stipulation in the instrument of trust that it is revocable”41
FATF Guidelines and the Islamabad Capital Territory Trust Act 2020
ICTTA is a comprehensive law that is enacted while keeping in view the requirements and guidelines of FATF. It is important to understand that this law is not only passed due to pressure from FATF but also will play a crucial role in the management and administration of all Waqf properties in the territory of Islamabad. The plan is to expand this law in phases to all the areas of Pakistan hence in its initial phase it is only implemented in Capital Territory. Waqf properties are reportedly misused by criminals, terrorists, and other negative elements in Pakistan due to lack of check and balance but ICCTTA is a comprehensive law that can thwart the designs of all such negative elements if implemented in true spirit.
Another positive impact of ICCTTA is the acknowledgment of FATF regarding the efforts of Pakistan in the right direction. With the passing of this law, FATF is satisfied that Pakistan is doing serious efforts to control money laundering and terror financing. FATF kept Pakistan in the Grey List although at one point it was evident that FATF will put Pakistan on Black List. Due to the passage of ICCTA and other steps taken by the Government of Pakistan, FATF kept Pakistan in the Grey List.
Conclusion
This study has critically examined and analyzed the newly promulgated Islamabad Capital Territory Act 2020 (ICCTA). ICCTA is interpreted and its main features are highlighted and it is also compared with the existing laws dealing with WAQF properties in Pakistan. The study paid a special emphasis on the guidelines provided by FATF for the promulgation of this law and provides a picture of the current scenario related to terrorism and anti-money laundering in Pakistan.
The study concluded that the newly promulgated law is a comprehensive law that is complete in all aspects and provides a better mechanism for the administration and management of WAQF properties. The study also revealed that how ICCTA helped Pakistan to remain in the Grey List of FATF. A further Qualitative study can be conducted on the issue while conducting interviews of stakeholders i.e. law enforcement personals, Waqf representatives, and the general public.
References
Cizakca, M., Islamic Economic Studies, 1998, 6(1).
2 Sadeq, A. M., Waqf, perpetual charity and poverty alleviation. International Journal of Social Economics, 2002.
3 Kahf, M., Financing the development of awqaf property. American Journal of Islamic Social Sciences, 1999, 16(4), 39-68.
4 Kahf, M., The role of waqf in improving the ummah welfare. In International Seminar on Waqf as a Private Legal Body, 2003, Pg. 6-7.
5 Abdullah, M. Waqf and trust: the nature, structures and socio-economic impacts. Journal of Islamic Accounting and Business Research. 2019.
6 Gaudiosi, M. M., Influence of the Islamic Law of Waqf on the Development of the Trust in England: the Case of Merton College. 2019, U. Pa. L. Rev., 136, 1231.
7 Ibid.,
8 Kozlowski, G. C., Muslim endowments and society in British India (No. 35). CUP Archive 1985.
9 Ibid.,
10 Malik, S. J., Waqf in Pakistan1. Die Welt des Islams, 1990, 30 (1-4), 63-97.
11 Manual of Waqf Laws, Lahore. 1983 pp. 142.
12 See Supra note 10
13 Ibid.,
14 Ibid.,
15 Wadehra, V. & Chokhani, V., Charitable Trust: Validity of property transfers. Indian Business Law Journal. Retrieved from https://law.asia/trusts-validity-property-transfers/, 2019.
16 Hassan, A., & Shahid, M. A., Management and development of the awqaf assets. In Seventh International Conference—The Tawhidi Epistemology: Zakat and Waqf Economy, Bangi 2010, pp. 309-328.
17 Sec 2(u), Islamabad Capital Territory Trust Act 2020
18 Sec 2(v), ibid
19 Sec 2(w), ibid
20 Snell, E. H. T., Baker, P. V., & Megarry, R., Principles of Equity. by RE Megarry and PV Baker. Sweet & Maxwell. 1996.
21 Sec 2(a), ibid,
22 Sec 2(b), ibid,
23 Sec 2(i), ibid,
24 Sec 3, ibid,
25 Section 13, Islamabad Capital Territory Trust Act 2020
26 Section 14, ibid,
27 Section 15, ibid,
28 Section 16, Islamabad Capital Territory Trust Act 2020
29 Section 43, ibid,
30 Section 44, ibid,
31 Section 46, Islamabad Capital Territory Trust Act 2020
32 Section 47, ibid,
33 Section 49, 50, ibid,
34 Section 67, ibid,
35 Section 68(2), ibid,
36 Section 69, ibid,
37 Section 70, ibid,
38 Section 83, Islamabad Capital Territory Trust Act 2020
39 Section 85, ibid
40 Section 86, ibid
41 Section 89, ibid
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