It has been reliably learnt that tax evaders and fraudsters have found a new way of tax evasion and money laundering. They are buying bitcoins to launder the tax evaded money and in many cases parking of their black money out of Pakistan. It is pertinent to mention that tax evasion is a predicate offence under the Anti-Money Laundering Act 2010, and government has appointed the Directorate General I&I-IR as the investigating and prosecuting agency in cases of money laundering where tax evaded money is laundered or attempted to be laundered.
Trade of Bitcoins (virtual currency/crypto-currency) is on rise in Pakistan, and during the initial inquiry it was revealed that bitcoins are being traded in Pakistan mostly against cash. Present price of bitcoin is hovering around Rs 200,000, and upon receipt of credible information, the Directorate undertook a search to trace and track the trade of bitcoins to nab culprits who are involved in the heinous crimes of tax evasion and money laundering. Summons were issued to some of the major traders of bitcoins for further investigating their affairs, who are facilitating the trade of crypto-currencies without reporting it in their tax declarations. These individuals are the major traders of bitcoins.
As per one report published online, trade volume of bitcoins increased 400 percent only during December 2016 in Pakistan. It is pertinent to mention that due to decentralisation of peer-to-peer online transactions and their anonymity, there are various instances where bitcoins have been used as a tool for money laundering, as currently there are no laws regulating the trade in said currency. Currently, the crypto-currency is not recognised as a form of currency by State Bank of Pakistan, and is therefore traded as a commodity.
During the inquiry, it was found that major traders of bitcoins, who have traded thousands of bitcoins are employed in a multinational telco company in Islamabad, and are also maintaining bank accounts in few other countries. However, the traders were not reporting their business activities before the tax authorities, raising suspicions of money laundering.
Since the under reference area possesses high risk of tax evasion and money laundering, therefore further inquiry is being carried out to gauge actual quantum of trade in bitcoins, to scrutinise whether income derived there from is being properly reported under the tax laws, and if not, to investigate any possible tax evasion or money laundering being committed through this innovative technology, keeping in view relevant provisions of Income Tax Ordinance 2001 and Anti-Money Laundering Act 2010, sources added.
Copyright Business Recorder, 2017