Money laundering, tax evasion: Rs0.5m fine imposed under AMLA-2010 and Rs0.1m under ITO-2001

ISLAMABAD: The government has imposed a fine of only Rs0.5 million under the Anti-Money Laundering Act 2010 (AMLA-2010) and Rs0.1 million in 113 cases prosecuted under Income Tax Ordinance 2001.

It was disclosed by the Federal Board of Revenue (FBR) that law also provided two years’ rigorous imprisonment under AMLA-2010 and one year under the ITO-2001.

According to the FBR brief submitted to the Senate Finance Standing Committee, investigation under the AMLA-2010 is started after receiving financial intelligence from the Financial Monitoring Unit (FMU) of Pakistan.

The information related to business persons or others is analysed by the FMU and then disseminated to the designated investigating and prosecuting agencies under AMLA-2010 in the form of financial intelligence for enquiry under AMLA-2010.

Financial institutions involving suspicions of tax evasion and money laundering based on tax evasion are shared with the Directorate General of Intelligence and Investigation-Inland Revenue (DG I&I-IR) for enquiry and investigation under AMLA-2010.

The DG I&I-IR is one of the designated investigating and prosecuting agencies under AMLA-2010 which investigates and prosecutes money laundering (ML) cases based on the designated serious offences of tax evasion provided in the law.

The suspect is also given the opportunity under tax laws to explain the viewpoint. In the light of the inquiry, a comprehensive report is prepared and presented before the director with the recommendations, which may include, with reasons to be recorded, closure of the case, simple tax evasion or tax evasion with the ingredients and elements of ML offence.

After a thorough discussion, if in the aforesaid meeting it is concluded that in addition to tax evasion elements of money laundering exist, the concerned regional director assigns the case to an investigating officer for proceedings under AMLA-2010 which includes registration of the FIR, application to the special judge for provisional attachment of the property involved in money laundering. If the court allows the provisional attachment, then a show-cause notice is issued to the accused to explain the sources of assets acquired, which means that even after registration of FIR and attachment of assets the accused is provided an opportunity of being heard.

Final forfeiture of property and punishment is adjudicated by the court through a trial. Money laundering being a cognizable offence, the Investigation Office can arrest the accused as per law without the court’s permission, however, the DG I&I IR as per SOPs/policy, discourages this practice. In rare circumstances, if an arrest is required, it is done through a warrant of the court.

As per law, an investigation officer may conduct a search and survey, but as per SOPs/policy, no search/survey has been carried out till date under AMLA 2010.

The SOPs also provide certain considerations which among others include;(i) availability of the evidence, domestic or international;(ii) value of the assets identified as POC;(iii) compliance level (tax statutes) of the accused;(iv) risk factors- areas prone to tax evasion/ML (geographical, sectoral (business sector), NPO/trusts/PEP, etc); (v) transaction with related or unrelated parties of resource costs required to investigate the POC or ML offence; and (vi) strengths and weaknesses of the case and likelihood of a successful prosecution.

Copyright Business Recorder, 2022