Fraudulent clearances of imported goods: FBR urged to include representatives of SBP, Directorate of Customs Intelligence in body

ISLAMABAD: The Directorate of Customs Reform and Automation has requested the Federal Board of Revenue (FBR) to include representatives of the State Bank of Pakistan (SBP) and the Directorate of Customs Intelligence in the committee to probe fraudulent clearances of imported goods to the tune of billions.

In this connection, the directorate has written a letter to the FBR.

The subject fraudulent clearances of imported goods made without meeting mandatory requirements of financial instruments involved the illegal transfer of funds out of Pakistan violating the Anti-Money Laundering Act, 2010 (as amended) and sections 32, 32A and 32C of the Customs Act, 1969, therefore, include the Directorate General of Intelligence and Investigation, Customs, Islamabad being the lead anti-money laundering Customs agency.

Recently, Pakistan Customs as well as the Pakistan Single Window (PSW) officials held a discussion over the financial instrument.

It was also revealed in the meeting that traders/importers have tried to clear GDs on unauthorised open accounts, however, the PSW team claimed that there were technical errors in the WeBOC system and we immediately alerted the WeBOC team which detected and fixed the issue on 01.02.23.

The PSW has taken immediate cognisance and the issue was escalated to the concerned regulator i.e. the SBP and shared with the relevant authorised dealers (commercial banks) as per directions of the SBP along with clearance data for scrutiny and further necessary action under the relevant banking laws and regulations.

On the other hand, Customs officials said that “we have not been consulted on unauthorised open accounts. Neither the inquiry report was shared nor identified delinquent importers involved in fraudulent clearance of imported goods without meeting mandatory requirements of financial instruments, sources said.

The sources said the Directorate of Reforms and Automation, Karachi also informed that the directorate has relied upon GD clearance data of importers with respect to “Open Account” during the period from 07-12-2021 to 26-06-2023.

The financial instrument has not been tagged around 52,538 numbers of GDs involving $1.478 billion, the sources added.

Similarly, the financial instrument has also not been tagged for more than one year on 9,680 numbers of GDs involving $3.26 million.

The Directorate of R&A informed that the SBP’s Foreign Exchange Manual only allows the import of spare parts, raw materials by manufacturing and industrial concerns and commercial importers, life-saving medicines and devices, aircraft-related spare parts/components, lab equipment, instruments imported by educational institutions for their own use, newspapers, magazines, periodicals, books etc.

Whereas, under “Open Account” the authorised dealers (commercial banks) allowed open account facility to importers in violation of Para 17 (ii) of Chapter 13 of the Foreign Exchange manual, the sources added.

The Customs officials further said that the bank integration system was not developed in consultation with the Directorate of Reform and Automation but rather development was conducted in isolation.

In addition, the PSW officials have a point of view that multiple goods declarations cannot be filed under a single financial instrument is prima facie wrong and contrary to the applicable regulations and business practices.

Whereas, Customs officials partially agreed that a single financial instrument can be attached with multiple import GDs. However, it is reiterated that certain importers of solar panels were involved in the misdeclaration of unit invoice value on an exorbitantly lower side as compared to the declared value by the importers and by doing so, they were misusing single FI repeatedly practices against multiple GDs.

They also reported it to the director Reform and Automation, Karachi for creating additional checks in the system. So those who discovered the issue and initiated action have nothing to conceal.

Copyright Business Recorder, 2023