TF, Tax Evasion and Money Laundering
FMU received a Suspicious Transaction Report (STR) from ABC Bank against Mr. Sun who was doing Marble Business and had extremely high turnover in his accounts. Based on the reported STR, FMU conducted a detailed analysis of all reported STRs/CTRs against Mr. Sun and his business. During analysis, turnover of billions of rupees was observed in suspects multiple accounts maintained with different banks, whereas no tax was paid by him. Based on this analysis, FMU shared a Financial Intelligence against Mr. Sun with relevant LEA, for suspected predicate offence of tax evasion and ML.
Based on FMU’s Financial Intelligence, LEA initiated an enquiry against the suspect and the news came in the newspapers. Based on adverse media news, additional STRs were reported to FMU by different banks against multiple accounts of Mr. Sun, along with details of his major counterparties.
During analysis of these additional STRs on Mr. Sun, multiple STRs were found against many of the given counterparties of Mr. Sun, reported by different banks for having inconsistent activity in their accounts. Most of his counterparties were general order suppliers and turnover in their accounts was found to be in millions of rupees. Based on FMU’s analysis, Mr. Sun and his counterparties were suspected to be involved in Hawala, Smuggling and Tax Evasion.
Meanwhile, FMU received a request of information from one LEA against a few accounts which were allegedly being exploited for transnational TF. A search was conducted against these accounts across FMU’s database and STRs/CTRs were found against a few of these accounts which were maintained by three different individuals (Mr. X, Mr. Y and Mr. Z). Two of these individuals (Mr. X and Mr. Y) were identified to be the counterparties of Mr. Sun. Thus, a suspicion was raised against Mr. Sun and his counterparties for their possible involvement in TF also.
Based on new information, analysis of STRs/CTRs of all the suspects (Mr. Sun, his counterparties and other related individuals) was done and a collective turnover of billions of rupees was identified in the accounts of all the suspects. The activity in the suspects’ accounts was not in line with their profile and transaction with unrelated counterparties in far flung areas (including High Risk Regions) of the country were observed. Many of the suspects were found to be transacting with each other on frequent basis. Based on FMU analysis, all the suspects appeared to be part of an organized network involved in TF, Hawala/Hundi and smuggling. Thus, financial intelligence on all the individuals was shared with the relevant LEAs and the financial regulator.
On FMU’s intelligence the concerned LEAs initiated inquiries with following outcomes:
Taxation Authorities (FBR-IR) registered a case against Mr. Sun and his associates under Income Tax Ordinance, 2001 along with Anti Money laundering Act, 2010. The suspects were charged for committing tax theft of more than PKR 1.26 billion over the period of last 5 years.
The Customs Court issued bail-able arrest warrants for four accused. The Customs and Taxation’s Special Court granted permission to attach ten immovable properties and ten bank accounts of four accused. Further investigation is under progress.
Counter Terrorism Wing (CTW) of FIA, initiated an investigation against Mr. Sun and his associates for their involvement in TF and ML. FIA-CTW lodged an FIR against Mr. Sun and his associates under different laws including AML Act 2010 and Anti-Terrorism Act 1997. During the course of enquiry, sufficient incriminating evidence came on record substantiating that the said individuals committed the offence of TF, using channels of Hawala and employing tactics of ML and forgery. The case is under investigation.
SBP (central bank of Pakistan) conducted a thematic inspection covering multiple banks and carried out focused onsite review of the bank accounts and as a result, imposed monetary penalties on multiple banks for violation of Prudential Regulations for AML/CFT.