Limiting the powers of FBR body

It is a tragic but not entirely unexpected move to suspend the probe against 270 influential people accused of laundering untaxed money into accounts and assets abroad. The powers of the Intelligence and Investigation Directorate of the Federal Board of Revenue have been left vulnerable to legal challenges. And it is not hard to see why given the staggering value of untaxed money and assets running into tens of billions of rupees and the remarkable influence that those holding them have. After all, it was no less than the State Bank`s Financial Monitoring Unit that flagged them for possible money-laundering and brought forward their cases before the FBR for investigation. So influential people sent out missives seeking to revoke the power of the I&I directorate.

Since the FBR directorate succeeded in recovering Rs10 billion over an 18-month period, it would stand to lose the same money in refunds if the anti-money laundering mandate is not restored to it. Of this sum, Rs6.5 billion alone was recovered from a single industrialist. In matters like these businessmen and industrialists are strongly and proportionally ahead of their counterparts in the world of politics.

Since 2016, the I&I directorate of the FBR has been invoking the power extended to it under an SRO for initiating proceedings under the Anti-Money Laundering Act (2010) against people suspected to have laundered tax-evaded money. In case a person confesses to having cheated the tax man, they are asked to deposit the same amount in the regional tax office. But if they are not so forthcoming they are liable to face criminal proceedings.

This issue could impact the review by the Financial Action Task Force (FATF), which agreed to place Pakistan on its `grey list` in the last week of February. Following the move, the FIA, NAB, ANF, the I&I directorate and other agencies have been asked by the FATF to submit a compliance report by April 9. Next, there will be a technical team visit to evaluate the steps taken by Pakistani authorities in combating money laundering and terror financing.

The timing of the SRO suspension is important as it came at a time when the international body is already questioning Pakistan`s abilities to crack down on money laundering.

Published in The Express Tribune, March 26^th, 2018.

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