Action against people suspected of money laundering delayed

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ISLAMABAD: The Federal Board of Revenue (FBR) has delayed action for over a year against influential people who were accused by the State Bank’s Financial Monitoring Unit (FMU) of laundering money abroad.

The number of accused is more than 330 — 80 per cent of them are business tycoons and 20pc influential politicians.

The FMU generates monthly reports about suspicious transactions which are shared with the Federal Investigation Agency (FIA), National Accountability Bureau (NAB), Anti-Narcotics Force (ANF), and Customs Intelligence.

In June last year, the government extended the scope of the Anti-Money Laundering (AML) Act, 2010, to the Intelligence and Investigation (I&I) Directorate of Inland Revenue. As a result, the directorate received more than 210 suspicious transactions reports (STRs) between July 2016 and June 2017 related to tax and various duties. Other cases were sent to the FIA, NAB and ANF for investigation.

“We received on average 18 STRs every month from the FMU,” a well-placed source in the FBR.

The I&I directorate can initiate proceedings under the AML Act. If a person admits to having evaded tax, he or she will have to deposit the due taxes in the respective regional tax office (RTO). However, in case the person is not willing to pay the tax, criminal proceedings can be started against him/her under the law.

So far, according to the source, criminal proceedings were only initiated in two Karachi-based cases. In one case, the FBR recovered an amount of Rs6.204bn in a court of law.

Interestingly, out of the 330 individuals more than 105 are not even national tax number (NTN) holders. Despite this, the source says, the FBR is reluctant to initiate probe into these potential cases of tax evasion.

The breakdown showed that 57 individuals were based in Karachi. Of them, 22 were top businessmen while 12 belonged to political families.

“These influential people are using their power to stop proceedings in these cases,” the source said.

The FMU reports gained importance recently because of the fact that I&I directorate has all details, including assets and investments of individuals. “It is because of this fact that the elites are blocking probe into these cases,” an FBR official said.

Besides, around 25 cases involve individuals from Lahore, 18 from Islamabad and the rest from Hyderabad, Peshawar, Faisalabad and Multan.

Contrary to the lowest compliance level at the I&I directorate, a letter was sent to FBR Chairman Tariq Pasha about a number of businessmen having received notices from respective banks, seeking details of their and their families’ banking transactions.

On Aug 15, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) sent the letter to the FBR chairman, which claimed that these businessmen were bona fide and registered taxpayers who regularly filed their returns.

Recently, I&I Director General Shad Mohammad testified before the Senate Standing Committee on Finance that no person had been harassed because his department had only pursued three cases so far.

Talking to Dawn, FPCCI president Zubair Tufail conceded that it was the right of the tax department to issue notices in all those cases where ‘abnormal transactions’ were carried out from the bank accounts. He said special probe should be carried out into those cases where the persons concerned did not even have the NTNs.

An I&I department official acknow­ledged the slow disposal of the cases. He, however, listed several logistic and material hindrances which had marred the performance of his department.

According to a report of the I&I department, the real challenge was the shortage of personnel. “If strong writ of Inland Revenue is to be established across the country, it can be best achieved through this enforcement wing of the FBR,” the report adds.

Unfortunately, according to the report, the human resource department of the FBR has not only failed to focus on arranging training of officers in areas of financial crime investigations, money laundering, white-collar crimes and criminal investigations, but has also discouraged the I&I officers to even seek the FBR permission for applying to participate in training in financial investigations.

Given the specific and professional nature of the job of conducting financial investigations, it remains another challenge for the I&I department to get its officers and staff trained in the presence of this regressive and pedantic red-tapism on the HR side, added the report.

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