Financial watchdog to get access to taxpayers’ data

Decision made to curb money laundering and terror financing in line with FATF action plan

ISLAMABAD: The federal government has decided to give the financial monitoring unit of the finance ministry access to the Federal Board of Revenue’s (FBR) inland revenue database to curb money laundering and terror financing in compliance with the action plan of the Financial Action Task Force (FATF).

According to documents available with The Express Tribune, the federal government has introduced a policy to provide the unit access to the FBR's inland revenue database through mutual consultation with the stakeholders.

The policy has been drafted and is expected to be finalised by the end of this month.

During a meeting of the FATF coordination committee, the FBR was given the target finalise the proposals from the relevant stakeholders by the end of October 2018 which had to be implemented in January 2020. Sources said banks had started the information was passed on to the departments concerned including the financial monitoring unit on a case-by-case basis if a suspicious transaction related to money laundering or terrorism financing was detected.

However, the unit could not access the FBR inland revenue database directly because of some legal hurdles.

Under Section 216 of the Income Tax Ordinance 2001, the FBR was not allowed to disclose information of taxpayers, including wealth statements, returns or accounts, any evidence, affidavit or deposition made in the course of any proceeding, and any record of assessment proceeding related to tax recovery. However, this information can be shared with the unit.

A presidential ordinance was promulgated this month to allow information-sharing with the financial monitoring unit. The ordinance will now be approved by parliament.

The Senate Standing Committee on Finance has already given the nod to the changes.

The punishments and fines are due to increase for the elements involved in terrorism financing and money laundering according to the proposed amendments in the tax laws.

Similarly, a separate body has been proposed to punish the elements involved in money laundering and terrorism financing. For this purpose, a draft of rules has been introduced that would be implemented soon.

Law enforcement agencies are being authorised to investigate and prosecute in cases of money laundering and terrorism financing. In addition, the plan to increase the capacity of financial monitoring unit is in an advanced stage.

Pakistan says it has made significant progress on the implementation of 27-point Financial Action Task Force’s determined plan.

The government adds it has largely addressed 22 points related to curbing money laundering and terror financing.

The achievements have been claimed in a progress report, sent to the Joint Group of the FATF, which is scheduled to meet in Beijing on January 21 and 22.

Pakistan will be judged by an FATF plenary next month on the basis of the Joint Group’s report. India and China jointly co-chair the meeting.

Pakistan has sought the global body’s support to declare at least 22 points largely addressed during the review meetings, said sources who have worked on the progress report.

In background discussions, Pakistani authorities have claimed that they showed full compliance on five action points and are largely compliant on another 17.

They said the progress should be enough for the FATF to strike the country’s name off its grey list.

The Pakistani authorities have taken a position in the progress report that the country will keep submitting progress reports on the remaining five action points related to measures against cash couriers, terrorism financing risk assessments and amendments in laws.

In February 2018, the FATF had found serious deficiencies in the country’s anti-money laundering and combating financing of terrorism regimes.

It placed Pakistan on grey list with effect from June 2018 and gave final warning to Pakistan in October last year to show full compliance by February 2020.

In October, Pakistan was found largely compliant against five targets, which the authorities now say have reached to 17.

In October, the FATF had declared another five action points related to convictions, targeted financial sanctions as non-compliant, whose status, as per Pakistani authorities’ claim, is now partially compliant.

Only those technical issues remain unaddressed where legal amendments are needed or actions need more time, according to the sources.

The amendments have been proposed and the bills are at various stages of approval.