FBR issues new regulations to comply with FATF plan

The federal government has taken further steps in compliance with the Financial Action Task Force (FATF) recommendations, making it mandatory for accountants, real estate agents and property dealers and jewellers to collect data of buyers making transaction of more than Rs2 million.

In this regard, the Federal Board of Revenue (FBR) has issued a notification, which will also apply to politicians and their dependent family members. It makes it mandatory for accountants, real estate agents, property dealers and jewellers to submit the data of buyers of property, jewellery and gems.

The FBR has issued Anti-Money Laundering and Counter Terrorism Financing Regulations 2020 for the designated non-financial business and professionals (DNFBPs) through notification No 924 (I) / 2020. It says the violators would be punishable with imprisonment under the Anti-Money Laundering Act.

According to the notification, a copy of which is available with The Express Tribune, the real estate sector and jewellers will have to fill up a form from the buyer on the transaction, amounting to Rs2 million or more.

It must also state the name of the person making the purchase, the computerised national identity card (CNIC) number of the buyer, address, contact number, mode of payment, the name of the owners and beneficiaries of the purchased property etc.

According to the regulations, it must be revealed if there was a politician among the owner or beneficial owner in the sale and purchase of the property, jewellery or precious gems. Similarly, any individual, who owns a business but also works for the benefit of a political figure must also provide information.

The regulations further state that politicians must also provide information and records of their spouse, children, dependents and their family members. It says that the accountants, real estate agents and property dealers and jewellers have to register themselves with the FBR as the DNFBPs and the documents required for the registration must be provided to FBR.

The notification asks the DNFBPs to take steps for risk assessment and mitigation under Section 7F of the Anti-Money Laundering Act, under which they have to identify their customers and take necessary steps regarding countries, geographical areas, products, services, transactions and delivery channels.

The DNFBPs are also required to maintain a complete record of their clients and customers under Section 7C of the Anti-Money Laundering Act, in which they have to keep details of the modes of transaction, the date of transaction, the currency in which the transaction was made and the record of the people, in case there was pending case in any court or competent authority.

The notification further says that the DNFBPs will have to introduce comprehensive compliance programmes under Section 7G of the Anti-Money Laundering Act and ensure their implementation. In addition. the DNFBPs will have to send suspicious transaction reports (STRs) and counter-terrorism reports (CTRs) to the Financial Monitoring Unit (FMU) on a regular basis.

When contacted, a senior FBR official said that the main purpose of these regulations was to ensure implementation of the FATF Action Plan. “It is being made mandatory to keep records of property and jewellery buyers in order to keep checks on terrorism financing and money laundering,” he said

The officer said that the source of the amount paid by the buyer must also be revealed. It has to be recorded [that payment has been made through] the bank cheque or paid in cash so that the source of income can be ascertained and it can be determined whether or not tax has been paid.