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Typologies


Fraudulent Declaration/Capital Flight/Tax Evasion

Background of the Case:

Suspects were involved in unauthorized capital flight and tax evasion by setting up off-shore companies.

Modus Operandi:

STRs were reported on Mr. and Mrs. XYZ by different Exchange Company on the basis of structured currency exchange transactions. They were engaged in purchasing foreign currency (USD) and deliberately violated the SBP threshold of US$ 50,000/-, through structuring and utilizing different exchange companies. The overall magnitude of amount involved (identified through CTRs) was very high, which triggered a suspicion. Through CTRs, we also identified that the husband wife duo were maintaining multiple foreign currency accounts at different banks. The overall transactional pattern revealed that they were withdrawing funds from their LCY accounts, followed by purchase of foreign currency from open market and then deposited into FCY accounts, which were finally being remitted out of country.

The individuals were renowned business family and owners of 3 well-known companies in Pakistan. While searching the open databases and media news, it was found that the individuals were named in panama leaks for owning offshore companies. It was also found that they were in process to sell their companies to a foreign company. The news was confirmed on the basis of STR filed by the SBP, wherein it was reported that irregularities were found during the said acquisition process and they had produced fraudulent declarations in sale agreement.

On the basis of the above findings, it was suspected that Mr. and Mrs. XYZ were possibly involved in dishonest & fraudulent declarations, breach of foreign exchange regulations, unauthorized flight of capital, tax evasion, etc. Therefore, FMU gave freezing orders of the accounts of individuals on immediate basis and shared the financial intelligence to NAB, I&I-IR (FBR) and SBP for prompt action as deemed appropriate.

FBR-IR had recovered the tax liability to the tune of PKR 6.2 billion from the individuals in May 2015 on the basis of FI shared by the FMU.

The background of activity was that the individuals were major shareholders of three companies Company A, Company B and Company C. During 2011, they had sold their one Company “Company C” to and offshore company for US$ 30 million. Later in the next year, Mr. and Mrs. XYZ has sold all of three companies to an international firm for US$ 1000 million, out of this total amount US$ 300 million were remitted out of country to the account of an offshore company claiming that “It was the sale amount against Company C which they had sold to that offshore company in 2011”. The suspects also produced two different sale agreements in which Company A and Company B were sold by these individuals, whereas Company Z was sold by proclaimed Offshore Company to an international Firm. However, it was suspected that the company which was sold for US$ 30 million a year ago, how it can fetch US$ 300 million. Upon enquiry, it was established that husband-wife were actually the beneficial owner of that offshore company. This was how they had concealed/manipulated the real beneficiary of sale agreement, evaded SBP threshold, Tax regulations, caused loss to foreign exchange by unauthorized capital flight.

Banking Instruments / Products / Services used:

Cash cheques, Clearing cheques, Currency exchange, Outward remittances, FCY accounts, Off-shore accounts/ company.


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