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Tag: money laundering

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  • FBR starts air travelers’ monitoring to detect money launderers, drug smugglers

    FBR starts air travelers’ monitoring to detect money launderers, drug smugglers

    ISLAMABAD: Federal Board of Revenue (FBR) has launched passenger profiling system at international airports to curb money laundering and drug smuggling.

    A statement on Thursday said that Pakistan Customs, a wing of the FBR, has launched a specialized Risk Management System for passenger profiling at all major international airports in Pakistan.

    This exercise is part of the Customs Border Management Initiative (BMI) recently approved by the prime minister.

    The Passenger Profiling System, “Global Travelers Assessment System” (GTAS) is now operational at seven major airports of the country for which Customs staff has been adequately trained.

    Moreover, World Customs Organization (WCO) and US Customs and Border Protection (US CBP) have provided Technical assistance for deployment and implementation of the project.

    The system is capable of carrying out passenger profiling and targeting through Advance Passenger Information (API) and Passenger Name Record Information (PNR) for interdiction of suspected travelers, drug smugglers and money-launders etc. while adhering to the requirements of FATF action plan.

    It will also help in creating profiles of passengers travelling to and from Pakistan and generate risk indicators in advance using a proactive methodology for effective border management.

    According to Chairman FBR Syed ShabbarZaidi, the GTAS will also enable Customs to achieve the “Invisible Customs approach” with least presence at airports while facilitating the genuine passengers.

    The Chairman has also directed Member Customs Operations to ensure adequate training sessions for customs officers while initiating data sharing with border agencies which will serve as a targeting portal for all law enforcement agencies at Pakistan Customs National Targeting Centre.

  • Jewelers, real estate agents to maintain register, report suspicious transactions: draft rules issued

    Jewelers, real estate agents to maintain register, report suspicious transactions: draft rules issued

    ISLAMABAD: Federal Board of Revenue (FBR) has proposed to make mandatory for jewelers and real estate agents to report suspicious transactions. In this regard the FBR issued draft rules through SRO 1320(I)/2019 to make amendments in Income Tax Rules, 2002.

    As per the draft rules, the designated persons as jewelers and real estate agents should maintain documents and records, where the value of transaction exceeds Rs2 million in case of immovable properties and Rs one million in other cases.

    The FBR said that the designated persons would require to obtain and maintain the following relating to its buyers and sellers, namely:

    In case of an individual any of the following documents should be obtained by jewelers and real estate agents:

    i. copy of computerized National Identity Card (CNIC) issued by National Database and Registration Authority (NADRA).

    ii. copy of National Identity Card for Overseas Pakistanis (NICOP) issued by NADRA.

    iii. copy of Pakistan Origin Card (POC) issued by NADRA.

    iv. copy of Alien Registration Card (ARC) issued by NADRA, and

    v. copy of passport, having valid visa on it or any other proof of legal stay along with the passport (foreign nationals only).

    The jewelers and real estate agents also required to keep a list of all such customers where the business transaction was refused or needed to be closed either on account of failure of the customer to provide the relevant documents or the original documents for viewing as required.

    Regarding furnishing of information, according to the draft rules, the sale and purchase register for the immediately preceding calendar month shall be uploaded by the designated persons on the IRIS online system within 15 days of the end of the preceding calendar month for transactions.

    The draft rules said that the designated persons would mark a transaction as suspicious in the IRIS online system if the person has reason to believe that the transaction or a pattern of transactions of which the transaction is a part:

    (a) involves funds derived otherwise than from the business activity or assets declared to the income tax authorities;

    (b) is designed to evade any requirement of the Income Tax Ordinance, 2001 or to conceal the beneficial owner or his activity.

    (c) has no apparent economic or lawful purpose after examining the available facts, including the background and possible purpose of the transaction; or

    (d) involves financing of terrorism, including fund collected, provided, used or meant for, or otherwise linked or related to, terrorism, terrorist acts or organization and individual concerned with terrorism.

    According to the draft rules, the designated persons have also been asked to mark as suspicious transaction if the buyer or seller –

    (a) frequently changes bank accounts;

    (b) uses a bank account other than an account maintained in the name of beneficial owner;

    (c) makes or receives payment in cash or primarily in cash; or

    (d) maintains a creditor or debtor account with the designated person and instructs the designated person to adjust the balance of his account against a creditor debtor account of another buyer or seller.

  • SBP emphasizes more efforts for taking Pakistan out of FATF grey list

    SBP emphasizes more efforts for taking Pakistan out of FATF grey list

    KARACHI: Dr. Reza Baqir, Governor State Bank of Pakistan (SBP) on Monday emphasized on putting more effort against money laundering and terrorist financing to ensure that Pakistan is out of grey list in the next meeting of FATF.

    While inaugurating the conference on Anti-Money Laundering (AML)/ Combating Financing of Terrorism (CFT) and Trade-Based Money Laundering (TBML), Dr. Reza Baqir, Governor State Bank stated that significant progress has been made between May and September 2019 to meet the action plan items set by Financial Action Task Force (FATF) in different areas to demonstrate effectiveness of AML safety regime of Pakistan.

    There was a major rethink of the approach being taken by the authorities in early to mid 2019. Consequently, a number of steps were taken to significantly strengthen our approach to making progress on these issues.

    He however, stressed for the need of putting more effort to make progress on remaining areas to ensure that Pakistan is out of grey list in the next meeting of FATF.

    He was speaking to the conference conducted by SBP and Asian Development Bank today at SBP, Karachi in a collaborative effort to mitigate the risks of money laundering and financing of terrorism.

    Speaking at the conference, the Governor informed the audience that since the grey-listing, State Bank has arranged many AML/CFT outreach and awareness programs for its regulated entities and stakeholders and that the conference is a useful platform to understand the AML/CFT challenges being faced globally and the best practices followed in mitigating such challenges.

    In the context of implementing AML/CFT requirements, the Governor urged the financial sector to make efficient use of technologies for assessment of risks, controls and ongoing monitoring of financial transactions and enhance capacity by continuous training of their employees.

    Dr. Baqir emphasized that trade based money laundering poses complex and sophisticated challenges and that SBP inspection teams conducted thematic inspections of banks with respect to export and import of specific goods.

    He also referred to State Bank’s framework for managing risks of trade based money laundering and terrorist financing which has been issued to encourage authorized dealers (banks) to effectively manage the trade based money laundering and terrorist financing risks.

    Ms. Xiohang Yang, Country Director ADB, and Mr. Mohsin Ali Nathani, President & CEO HABIBMETRO Bank also spoke on the occasion. Ms. Yang stated that ‘AML/CFT is a critical issue for trade finance, which is why ADB’s Trade Finance Program is playing an increasing role in this space. She stated that ADB has a strong commitment to work with Pakistan’s banking sector and the SBP on this issue.

    Ms. Yang further stated that the FATF has identified enhanced capacity building/training in AML/CFT as an immediate priority requirement and they are pleased to partner with the SBP and thankful to HABIBMETRO Bank for organizing the same.

    Mohsin Ali Nathani, President & CEO HABIBMETRO Bank while addressing the conference added, ‘Enhancement of AML & CFT efforts through increased awareness and strengthened systems, controls and processes is imperative for our country and the banking sector. HABIBMETRO Bank is pleased to organize this conference and bring together relevant stakeholders from the region, regulator and banking sector to re-affirm our collective commitment to mitigating the risks of Money Laundering and Terrorism Financing.’

    During the conference several prominent speakers and panelists discussed the requisites and obligations with regard to AML and CFT, including Terrorism Financing Risk Assessments, Transnational Risks in Trade Based Money Laundering (TBML), risks posed by DNFBPs & NPOs and Ultimate Beneficial Ownership.

    The conference also included a detailed discussion on the impact of Trade Based Money Laundering and the repercussions of the same for the banking sector especially in the context of grey listing.

    The conference was organized by HABIBMETRO Bank and attended by the Deputy Governor State Bank of Pakistan, Country Head Asian Development Bank and international experts in the field of AML/ CFT and trade from the United States, Australia and UAE.

    Participants included CEOs and senior management of Banks, DFIs, Microfinance Banks and Exchange Companies and representatives from the SBP, Financial Monitoring Unit (FMU) and Securities & Exchange Commission of Pakistan (SECP).

  • FBR may get trade details of past five years from customs clearing agents

    FBR may get trade details of past five years from customs clearing agents

    In a bid to strengthen efforts against money laundering and enhance transparency in trade transactions, the Federal Board of Revenue (FBR) is reportedly considering a directive to customs clearing agents to furnish details of importers and goods declarations filed over the past five years.

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  • FATF gives Pakistan four months to comply with action plan

    FATF gives Pakistan four months to comply with action plan

    ISLAMABAD: Financial Action Task Force (FATF) on Friday set a deadline of four months for Pakistan to improve action plan against laundering and terror financing.

    At a press conference in Paris, France the officials of FATF expressed concerns over implementation of action plan by the Pakistani authorities.

    FATF strongly urged Pakistan to swiftly complete its full action plan by February 2020. Otherwise, should significant and sustainable progress not be made across the full range of its action plan by the next Plenary.

    It has been observed that action taken by Pakistan was not sufficient to address its Terror Financing risks. These include remaining deficiencies in demonstrating a sufficient understanding of Pakistan’s transnational Terror Financing risks.

    Pakistan’s failure to complete its action plan in line with the agreed timelines and in light of the terror financing risks emanating from the jurisdiction.

    To date, Pakistan has only largely addressed five of 27 action items, with varying levels of progress made on the rest of the action plan.

    In a statement, the ministry of finance said that the FATF Plenary meeting was held in Paris from 13-18 October 2019. The Pakistan delegation was led by Muhammad Hammad Azhar, Minister for Economic Affairs Division.

    The FATF meeting considered Pakistan’s progress report on the FATF Action Plan and Pakistan’s APG Mutual Evaluation report (MER).

    Pakistan’s delegation reaffirmed its political commitment to fully implement the Action Plan.

    The Plenary meeting decided to maintain status quo on the FATF Action Plan and allow the usual 12 months observation period for the APG MER.

    The delegation also held sideline meetings with various delegations and briefed them about the progress made by Pakistan on the FATF Action Plan and steps taken for strengthening its AML/CFT framework.

    A session on technical assistance and training needs of Pakistan was also organized in collaboration with UNODC and APG Secretariat which was attended by a number of interested countries and multilateral agencies including China, USA, UK, Canada, Japan, EU, World Bank, IMF, ADB, and UNODC.

  • Open account, advance payments considered as higher risk transactions for trade based money laundering

    Open account, advance payments considered as higher risk transactions for trade based money laundering

    KARACHI: State Bank of Pakistan (SBP) has advised financial institutions dealing foreign exchange to enhance due diligence on higher risk transactions to stop trade based money laundering.

    The SBP on Tuesday issued Framework for Managing Risks of Trade Based Money Laundering and Terrorist Financing and said that banks and financial institutions should ensure that high risk transactions in the area of trade business are subject to more extensive due diligence and are escalated, where required, to the higher management.

    ii. In this respect, following transactions may have higher Money Laundering/Terror Financing risks and may be considered for Enhanced Due Diligence (EDD):

    a) Open Account

    b) Advance Payments (Import & Export of Goods)

    c) Import/Export of Services

    d) Import/Export of Free of Cost Goods

    e) Trade transactions with related party

    f) Import of goods that are exempt from import related duties

    g) Import of goods that are subject to over 25% import duties

    h) Export of goods on which export related rebates are allowed by the Government of Pakistan

    i) Where an exporter allows trade discounts to the same importer consistently by the way of deduction of amount of discount from the proceeds of export bills.

    j) Trade transaction of sole proprietorship or partnership concern received by centralized trade processing unit from a different branch of an AD with whom their relationship is not generally associated or frequent switching of branch for trade transactions by such concerns.

    k) Trade transactions with high-risk jurisdictions or jurisdictions with lax AML/CFT regulations and implementations

    l) Outward remittance from personal FCY account of the importer

    m) Unusually relaxed terms for settlement of counter value both for exports as well as imports e.g. no specific timeline for shipment of goods against exports advance payment, extended credit period for payment against import of goods especially between unrelated parties.

    Due weightage shall be given by authorized dealers to the risk rating of the customer while allowing high-risk transactions.

    In this respect, a criteria shall be developed by the ADs whereby transactions falling in high-risk category specifically Advance Payments (Import & Export), where clients have outstanding overdues/poor performance history, shall be escalated to the higher management for taking appropriate decision about the fate of transactions.

    In case of recurrence of non-performance post allowing the transaction, the higher management of financial institutions may subject the customer to enhance/continuous monitoring.

    However, in case of persistent non-performance during the period in which the customer has been subjected to enhance/continuous monitoring, the AD may evaluate the transaction for filing an Suspicious Transaction Report (STR) with Financial Monitoring Unit (FMU) if they have sufficient grounds to form suspicion that the customer is using trade transaction to launder money, finance terrorism etc. ADs, in such circumstance, should also evaluate the risks of continuing relationship with the customer.

    Notwithstanding the above, even if the senior management of ADs on the matter escalated to it does not find sufficient grounds for filing of an STR, they may consider subjecting the customer to enhanced/continuous monitoring.

  • SBP issues framework for controlling trade based money laundering, terror financing

    SBP issues framework for controlling trade based money laundering, terror financing

    KARACHI: The State Bank of Pakistan (SBP) on Tuesday issued framework for controlling trade based money laundering and terror financing.

    In order to strengthen trade related Anti Money Laundering/Combating Financing of Terrorism (AML/CFT) regime and restrict possible misuse of banking channel, a comprehensive framework on the subject has been developed and attached herewith.

    Accordingly, Authorized Dealers (ADs) are advised to upgrade their systems and controls and bring policies and procedures in line with the requirements of the framework to ensure meticulous compliance with the provisions thereof with immediate effect except as otherwise provided in the framework

    The provisions of this framework are in addition to and not a replacement of already issued instructions on the subject of ML/FT risks. Therefore, the compliance of the same shall not absolve ADs from their legal and regulatory obligations under prevailing AML/CFT laws/rules and regulations or any other relevant law in force.

    ADs are also advised to educate their clients about their obligation of ensuring (a) correct declaration of particulars on the prescribed forms, (b) utilization of foreign exchange for the exact purpose for which it is acquired by them and (c) repatriation of foreign exchange that represents the full export value of goods.

    In the event, it is found that material information required to be submitted on the prescribed forms has been omitted or suppressed, foreign exchange is misutilized by a client of an AD or export proceeds repatriated by a client does not represent the full export value of goods, SBP shall initiate penal action against such delinquent parties under relevant provisions of the Foreign Exchange Regulation Act, 1947 (FERA).

    Further, the matter shall also be reported to relevant stakeholders for necessary action under the laws being administered by them.

    Failure to comply with the instructions on the subject and the regulatory obligations of AML/CFT may attract action against ADs under the FERA and other relevant laws.

  • Finance Bill, 2019: 10 years imprisonment for money laundering through foreign trade

    Finance Bill, 2019: 10 years imprisonment for money laundering through foreign trade

    KARACHI: In a determined effort to combat money laundering through foreign trade, the government has unveiled strict measures, including up to 10 years imprisonment for offenders and the confiscation of implicated consignments. These proposed reforms are detailed in the Finance Bill 2019, aiming to amend the Customs Act, 1969.

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  • Pakistan Customs launches swift consignment clearance system to improve ease of doing business

    Pakistan Customs launches swift consignment clearance system to improve ease of doing business

    KARACHI: Pakistan Customs on Monday launched the swift consignment clearance software for improving ease of doing business and trading across the border indices of the country.

    The system namely ‘WeBOC Global’ was inaugurated by Member Customs Dr Jawwad Uwais Agha at Custom house, Karachi.

    He introduced the key features of the newly developed ICT system which was attended by a large number of the senior officers of Pakistan Custom and members of the WeBOC-Glo Project team.

    The new version of Customs clearance system was deployed at early in the morning May 13, 2019 which has immediately replaced the previous version of WeBOC clearance system.

    This will be a modern and technologically advanced version of WeBOC which is an end to end automated online goods clearance system home grown by Pakistan Customs in 2011.

    With the introduction of new WeBOC system, the Custom clearance system of Pakistan will enter into the club of modern, upgraded and technologically advanced Custom clearance system of the world, the Member said.

    The WeBOC-Glo in addition to new modules and functionalities will be plugging the deficiencies of earlier clearance system pointed out during the course of time in internal reviews and ICT Gap Analysis by the World Bank.

    Components of Release 1.0 of the WeBOC-Glo were introduced by Iftikhar Ahmad, Collector/Convener of the project which included 13 modules and functionalities.

    The major modules included:

    (1) the Development of Electronic Data Interchange (EDI) with Terminal Operators for Export LCL Cargo, which will reduce dwell time at ports

    (2) the Quota Management of Bulk Export Cargo, which will facilitate auto debiting of assigned quota,

    (3) the establishment of IT interface with Ministry of Foreign Affairs for automation of Exemption Certificates,

    (4) the availability of WeBOC Glo on Chrome and Edge to provide convenience to users,

    (5) the enhanced Security Features, to safeguard the User IDs and relevant data of importers /exporters,

    (6) the unified Screens for MIS Officers, to ensure speedy processing,

    (7) the search engine for TARIFF and relevant SROs to empower users in Tariff and import/export policy information for correct filling and assessment of GDs,

    (8) the update on Containers Status, to allow traders the facility to keep track of containers,

    (9) Improved User Interface, aimed at making the system more user friendly and less time consuming and

    (10) the Glo Insight which strengthens the statistical Scrutiny and monitoring of Customs transactions through business intelligence and data analysis tools for informed decisions making.

    In addition to above, the WeBOC-Glo will be instrumental in closure of old Customs clearance system by automating areas that had remained outside its scope so far.

    (1) the Export Processing Zone, whose import and export clearance along with the role and functions of EPZA have been automated for the first time,

    (2) the GD Filing Without NTN, which will facilitate individual importers, Small and Medium Enterprises (SME) promoting e-Commerce in Pakistan,

    (3) the Exceptional GD Filing, which caters to all scenarios where auto clearance were held up due to peculiar taxation regimes on items or specific orders of superior courts.

    The team has been further instructed by Dr Agha to plan launch of Release-2of WeBOC Glo by the first week of July, 2019.

    The Release-2 will include further important modules like DTRE, Bulk Exports and Exports through Courier.

    With the development of these modules all the processes related to export will be fully automated which will definitely facilitate export sectors.

    Release-2 will also include E-Auction Module, for auction of confiscated goods in line with modern concepts of Auction.

    Oil imports contribute the major share in Imports Bill. All the processes like Import, storage, transportation and transit of Oil will also be covered in Release-2 Similarly PCA Entity based Audit module will also be part of it, which will dramatically enhance money trial analysis and be handy in detection of money laundering.

    Initial work has already been done on these modules and they are under different stages of development.

    Some less important modules will be launched in Release-3 by Mid September which will complete automation of all the Customs processes under WeBOC-Glo.

    Earlier, Dr Jawwad Agha conceived the idea of up gradation and functionally advanced new Customs system and had put in place a two tier setup, the WeBOC-Glo Domain team and Oversight and Approval Team, in December, 2018.

    In view of highly technical nature of the task officers having vast professional experience and well grounded in automated work environment were grouped together.

    The team lead by Collector Dr. Iftikhar Ahmad (project team leader) included: Additional Collectors Shafqat Niazi, Sanaullah Abro, Ms Mona Mehfooz, Ali Zaman Gardezi and Deputy Collector Ms Nausheen Riaz Khan.

    The project team leader said that packed and strict timeline was given to undertake the Businesses Process Re-Engineering (BPR), development of new modules and functionalities of the WeBOC Glo.

    He added that the project team had to put in long hours on weekend, over and above their regular work assignments, to meet the deadlines, while Agha continuously monitored the progress and provided his full support to project team. Within short time of four months, WeBOC-Glo project team under guidance of oversight and Approval team, consisting of senior officers of Customs succeeded in accomplishing the task of development of 13 different modules and functionalities of new version.

    User Acceptance Tests (UATs) with relevant stakeholders have been completed too. The PRAL’s Business Analysis and software Development Units provided able resource support and remained instrumental in the achievement.

    With the launch of the WeBOC-Glo, the Customs department moves further ahead as the leading public sector organization mag use of modern technology for hassle free public service delivery.

    The system ensures transparency, efficiency, professionalism and further reduces the interaction with taxpayer besides providing tech ability for future integration with artificial intelligence for RMS analysis.

  • FBR sets up directorate to initiate legal action in suspicious transactions, stop currency smuggling

    FBR sets up directorate to initiate legal action in suspicious transactions, stop currency smuggling

    ISLAMABAD: Federal Board of Revenue (FBR) has established Directorate of Cross Border Currency Movement (CBCM) to stop individual and trade based money laundering and initiate legal action in suspicious transactions.

    The directorate shall be function under administrative control of the Directorate General of Intelligence and Investigation, Customs, a notification said on Thursday.

    According to its scope and objectives, a database of currency seizures would be maintained and updated at the directorate. Further each Model Customs Collectorate (MCC) and regional directorate of I&I shall report information about currency seizures made within their jurisdiction on fortnightly basis to the directorate.

    The FBR said that the directorate would share the data of currency seizures with the FBR and Financial Monitoring Unit (FMU) on monthly basis or as when required.

    The FBR said that the directorate shall maintain and update database containing information of Suspicious Transaction Reports (STRs) received from the FMU. “The aforesaid data shall be shared with FBR and FMU on monthly basis or as when required,” it said.

    The directorate will require to disseminate the STRs to the concerned regional directorate of I&I for inquiry and investigation. “Each regional directorate shall maintain record of STRs received and appoint officers to carry out investigation in light of the approved plan. “Progress on the investigation conducted in each case shall be communicated to the directorate for onward submission to the FMU,” it added.

    The directorate will also responsible to devise a mechanism for information sharing with other law enforcement agencies (LEAs) on real time as well as on routine basis. The directorate shall also cooperate with LEAs in areas of mutual interest.

    The directorate has been authorized to institute cases of money laundering. “Nominated or appointed investigation officers shall instituted money laundering cases emanating from STRs or currency seizures or from other sources, by filing complaints/applications in the respective competent courts through public prosecutors appointed under AML Act, 2010.”

    The FBR said that investigation and prosecution of the cases would be conducted in accordance with the procedure laid down in AML Act, 2010 Customs Act, 1969 and Cr.P.C 1898.

    While investigating money laundering cases in general and currency cases in particular, investigating officer shall focus on the following aspects:

    a. The personal and / or family association with any religious / political/ social organization or groups, travel history, past criminal record, professional history, etc. of the accused / arrested persons shall be investigated. The motive/linkages of each currency smuggling case with any of the associated offence such as trade- based money laundering, capital flight, Hundi/Hawala, etc. shall also be covered in such investigation.

    b. Whether there is any linkage of terror financing related to trans-national terrorist networks or UN designated entities and individuals detected in the cases the officers will be required to report to the directorate.

    c. Whether there are possibilities of involvement of any foreign networks other than trans-national terrorist networks, the officers should approach Chief International Customs – FBR for seeking information about the foreign linkages of the investigation.

    d. the investigation officers are also required to find source of funding for cash smuggling and the end user of the smuggling proceeds.