15% of money laundering cases dismissed

FBR chief says out of 179 cases, 27 were sent back due to procedural issues

ISLAMABAD:

About 15% of money laundering cases that the Federal Board of Revenue (FBR) registered against taxpayers could not withstand scrutiny of a provincial court – a figure that may appear small to the taxmen but may have ruined the social and economic life of people.

Proceedings of the Senate Standing Committee on Finance on Thursday revealed that the complaints of taxpayers against the FBR had some valid grounds. Headed by Senator Saleem Mandviwalla of the PPP, the committee had called the FBR for a briefing on the status of money laundering investigation.

Due to the misuse of law, the committee decided to make amendments to the Anti-Money Laundering (AML) Act of 2010 aimed at excluding tax evasion from the list of 151 crimes that were charged under the Act.

Out of the 179 cases heard by the Lahore High Court (LHC), 27 were remanded back due to some procedural issues, said FBR Chairman Asim Ahmad. He added that the figure was not big and in future no call-up notice would be issued as per procedures. This suggests that 15% of the cases heard by the LHC could not withstand the scrutiny.

“For the harassment of taxpayers, one wrong money laundering case is sufficient,” remarked Senator Kamil Agha of the PML-Q.

Under the law, corruption also fell in the category of money laundering, but how many cases the FBR registered against its own officers, he asked.

The FBR chairman had no answer except to say that it was the jurisdiction of the FIA and NAB to investigate corruption cases in the public sector. The meeting was informed that the FBR was investigating 254 money laundering cases involving “crime proceeds” of Rs358 billion. It added that in those cases, 801 bank accounts and properties worth Rs3 billion were attached.

Out of the 254 cases, 113 cases have reached the prosecution stage involving Rs238.4 billion in crime proceeds, according to the FBR.

The FBR informed the committee that the Financial Monitoring Unit (FMU) sent suspicious transaction reports and then notices were served after being verified by a third party. Only transactions worth Rs10 million or above are treated under the AML Act, according to the FBR chairman.

Ahmad said that the 254 cases were a fraction of the total tax evasion, therefore, the impression that the FBR was excessively applying the AML Act was not correct.

However, the money laundering investigation is enough to ruin the social and economic life of a taxpayer. The treatment of tax evasion under the AML Act is excessive use of law that is meant to combat money laundering leading to financing of terrorism cases.

Mandviwalla said that suspicious transactions should be investigated under the tax evasion laws instead of the AML Act. The committee said that the AML Act served as a source of harassment of the business community. “How come concealment of money perhaps to evade tax, is a terrorist act or a criminal offence,” the committee observed and argued that until the offence was established, no notices under the AML Act should be issued.

“AML Act restrains the public from enrolling as a taxpayer on fears of consequences of AML notices and abnormal tax regimes,” said Senator Agha. The committee also finalised recommendations for the Money Bill, Tax Laws (Second Amendment) Bill 2022, laid in the house on December 15.

It unanimously rejected the amendment to empower the federal government to bring about new schemes and modifications in taxes, other than through the Money Bill. It maintained that any modification should be through legislation having representatives from the public. Similarly, the committee rejected a tax of Rs390 per kilogramme on the unmanufactured tobacco but accepted the amendment for the increased rate of FED per thousand cigarettes.

Published in The Express Tribune, December 23^rd, 2022.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.