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  • Apr 25th, 2017
  • Comments Off on Benami transactions: FBR establishes dedicated unit for AML
The Federal Board of Revenue (FBR) has established dedicated unit for Anti-Money Laundering at the Directorate General Intelligence & Investigation - Inland Revenue (IR) and its seven regional directorates to investigate and prosecute Benami transactions and money laundering cases involving predicate offence of tax evasion and/or tax fraud.

According to the sources, Chairman FBR Dr Muhammad Irshad chaired a meeting with Director General Intelligence & Investigation - Inland Revenue on the matter of establishing a dedicated unit for Anti-Money Laundering to investigate and prosecute growing offences of tax evasion and tax fraud in the country. During the meeting, a detailed concept paper on the matter was presented by Director General Intelligence & Investigation - Inland Revenue, Khawaja Tanveer Ahmed, containing a blue print on establishing the new unit. After having detailed discussion and deliberation on the issue, the chairman has approved the concept paper, and decided that dedicated anti-money laundering unit be established in the Directorate General I&I-IR and its seven regional directorates, with immediate effect.

The chairman directed that the units should be operational within this month at the Directorates of I&I-IR at Karachi, Lahore, Peshawar, Islamabad, Multan, Faisalabad, Hyderabad and Quetta. These units will be solely focusing on enforcement of anti-money laundering laws, in the cases of tax crimes.

The dedicated unit will investigate and prosecute those cases of money laundering, where predicate offence is tax evasion and/or tax fraud. In this regard, the chairman FBR issued instructions to put the concept paper on the FBR website for input from field formations also, within the next three days. He also issued instructions to the admin wing of the FBR to meet all requirements of staffing and logistics for the new unit so that the unit is operational by the end of this month.

The Director General I&I-IR also requested the chairman to approve establishment of police stations at all the regional directorates, as at present the Directorate General has to seek assistance of local police stations for keeping accused persons in custody during remand, which hampers smooth investigations. During the meeting, it was also decided that the dedicated Anti-Money Laundering unit will also be given powers under the Benami Transactions (Prohibition) Act, 2016. Money laundering can be defined as the process of disguising the proceeds of crime and moving value through the use of any medium like trade, investment in real estate, etc, in an attempt to legitimise their illegal origins. It is pertinent to note that keeping assets benami for the purpose of concealment from tax authorities is also a form of money laundering.

Given the increasing inflow of fresh suspicious transactions reports on regular basis being received from FMU, and for more effective and efficient handling of such cases at the Directorate General, Chairman FBR was of the opinion that the new unit should only focus and specialise in enforcement activities under the AML Act of 2010. This will enable I&I-IR to timely conclude cases of money laundering and realise revenue involved in such cases. Since 09.06.2016, I&I-IR has received 168 suspicious transactions reports from the FMU, sources said.

The director general I&I-IR informed that the highest number of STRs ie 49, pertain to Karachi Directorate, followed by Lahore Directorate which are 39, and Peshawar, 38. Similarly, other directorates across Pakistan are also receiving STRs regularly. STRs received by Islamabad are 27, Multan, 09, Faisalabad, 04, Hyderabad and Quetta, 02. As per the concept paper, the said dedicated unit will be headed by a director AML who will report to director general I&I-IR.

The director will be assisted by an additional director (headquarters) and three more additional directors at Karachi, Lahore, and Peshawar. Moreover, a number of deputy directors will be appointed as investigating officers in different directorates, who will perform the core functions of investigation and prosecution.

The Directorate General I&I-IR, Islamabad was notified by the government as Investigating and Prosecuting Agency within the meaning of section 2(i) of the Anti-Money Laundering Act, 2010 vide SRO No 611(1)/2016, dated 09-06-2016, for more effective and efficient handling of cases of money laundering. There are four predicate offences which have been added in the Anti-Money Laundering Act 2010 in 2016 regarding income tax evasion: prosecution for false statement in verification where tax sought to be evaded is ten million rupees or more, prosecution for concealment of income where tax sought to be evaded is ten million rupees or more, prosecution for improper use of national tax number [certificate] where tax sought to be evaded is ten million rupees or more, and prosecution for abetment where tax sought to be evaded is ten million rupees or more.

It is pertinent to mention that, in the short period of time since I&I-IR has been designated as an investigating & prosecuting agency under the AML law, FIRs/references have been lodged in the courts of special judge (taxation) of Karachi & Peshawar, under section 203/192A of the ITO 2001, read with Section 3 & 8 of the AML Act 2010. The director general informed that in the last two months of current fiscal year, the newly established AML unit will be able to recover revenue of around Rs 8-10 billion, sources added.



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