Senator alleges money laundering in IT sector

Says it is taking place due to collusion between Customs officials, private sector

ISLAMABAD: In a serious charge, Leader of the House in Senate Senator Shibli Faraz has said that annually $500 million worth of money laundering is taking place in the information technology sector due to collusion between Customs officials and private-sector stakeholders.

Faraz, who represents the ruling party in the upper house of parliament, expressed his complete helplessness in stopping the illegal activity despite being the leader of the house.

He was speaking during a meeting of the Senate Standing Committee on Finance, which met on Thursday and was chaired by Pakistan Peoples Party (PPP) Senator Farooq H Naek.

Senator Anwarul Haq Kakar of Balochistan Awami Party - an ally of the Pakistan Tehreek-e-Insaf (PTI) - alleged that the Afghan transit trade cargo was not crossing the border and instead goods are being dumped in Pakistan.

“Only against one tariff line nearly $500 million worth of money laundering is taking place in the IT sector, which is also causing an annual revenue loss of Rs8 billion,” said Faraz.

He said the figure, $484 million to be precise, was worked out on the basis of the Weboc system of the Federal Board of Revenue (FBR).

Faraz said in the IT sector money laundering was taking place in connivance with FBR officials and five to six private-sector people. He revealed that he had shared documentary evidence of money laundering with the FBR but no action was taken.

“A Customs official has been serving on a post at a port in Karachi for the past 20 years, which also shows the involvement of the FBR,” said Faraz. It appears to be a serious charge against the FBR, which may create problems particularly at a time when Pakistan is on the global radar and is placed on the Financial Action Task Force (FATF) grey list.

In its Mutual Evaluation Report, the Asia-Pacific Group on Money Laundering - a FATF-styled regional body - stated that Pakistan’s geographical landscape and porous borders increased its vulnerability to terrorism financing and heightened Pakistan’s terror financing risks associated with cash smuggling.

The report underlined that 8% of total suspicious transactions, analysed by the Financial Monitoring Unit, were disseminated as financial intelligence-related to the suspicion of smuggling offences.

With regard to the smuggling of goods, the value of all the seized goods including gold, currency, petroleum products, etc between 2014 and 2018 was approximately $477 million according to the FBR and Customs’ records, the APG report noted.

However, Senator Faraz said only in one product of the IT sector the annual money laundering quantum was $500 million, which was slightly higher than the goods seized by the Customs in four years.

The APG said exchange companies in Pakistan also identified the proceeds of corruption and smuggling as top threats of money laundering. The smuggling issue came up for discussion after the standing committee took up the agenda item of smuggling of LED televisions in Pakistan.

“LED televisions are being smuggled into Pakistan as the Customs can only man four posts across the whole length of Pak-Afghan border,” admitted Saeed Jadoon, Chief Customs FBR, before the committee.

He said due to the shortage of human resources, the anti-smuggling powers have been shared with other law enforcement agencies.

“A Ministry of Interior-led steering committee has recommended legal and administrative measures to address the smuggling issue and the recommendations are now with the Prime Minister’s Office,” said FBR Member Customs Javed Ghani.

Ghani said the government had the will to curb smuggling and fencing along the Pak-Afghan border would address such issues.

“Even the transit trade goods are not reaching Afghanistan and containers are offloaded in Pakistan,” said Senator Kakar. He said the Afghan transit trade goods reached Afghanistan only on papers.

However, Ghani said the government was efficiently tracking the Afghan cargo, claiming that in the past five years no case of dumping of transit goods had been reported. He, however, said the goods were smuggled back into Pakistan after reaching Afghanistan.

The FBR had awarded the cargo-tracking contract to TPL Trakker. TPL Trakker denied that Afghan cargo goods were being dumped in Pakistan.

Since May 2013, under the Safe Transport Environment Project, the cargo going towards Torkham and Chaman borders has been installed with a tracking device on the container door along with Customs seals at Karachi Port, according to a statement given by TPL Trakker.

Once the container leaves the port, the same throughout the journey is monitored by the TPL Control Room at the Customs House Karachi for any possible pilferage until it reaches its destination ie Torkham or Chaman, where after inspection by the Customs, the tracking device is removed, it added.

Published in The Express Tribune, October 11^th, 2019.

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