FBR Increases Fines and Prison Time for Money Laundering for FATF Compliance

The Federal Board of Revenue (FBR) is in the process of implementing new measures to check money laundering in line with the recommendations of the Financial Action Task Force (FATF) which include strict checking at airports and borders to control foreign currency smuggling.

If a person is caught smuggling foreign currency worth USD 10,000- 200,000 and above, a fine of up to ten times the value and imprisonment of up to 14 years depending on the amount of currency seized under different categories/slabs will apply.

Penalties were considerably increased for smuggling of dollars, precious stones and jewelry under the Tax Laws (Second Amendment) Ordinance 2019, keeping in view the requirement of the FATF.

The FBR had divided currency carriers into different categories.

  • Under the law, foreign currency up to $10,000 is allowed per person at the time of departure from Pakistan, the customs will confiscate foreign currency from $10,001 to $20,000.
  • In case of foreign currency from $20,001 to $50,000, penalty and imprisonment up to two years.
  • In case of foreign currency from $50,001 to $100,000, the penalty imposed could be four times the confiscated amount and imprisonment would be up to seven years.
  • If the amount of currency seized is over and above $200,000, the penalty would be 10 times the value of currency and imprisonment would be up to 14 years.
  • With reference to the smuggling of precious stones and jewelry, smuggling of 15 tola gold/jewelry will result in confiscation and the equivalent amount of penalty could be imposed.

Penalties were increased in line with the FATF requirements. The same level of penalties are imposed by India and other regional economies.

After increase in penalties, now the Customs Department has intensified efforts and enforcement at airports and borders, sources said.

Owing to a surge in smuggling, section 164 of the Customs Act was amended empowering Customs officials to fire in the line of duty.

Currently, Section 185A specifies the provisions for cognizance of offenses by special judges.

The time period of six months has been fixed for the finalization of proceedings in criminal cases because cases keep on lingering without any outcome for years.

No time limitation in the decision of the case also accords time to the investigating officers to submit final challan without a time limit, which aspect weakens the case as the time passed by.

The FBR had proposed harsh punishment, including imprisonment, for ”trade-based money laundering” through misdeclaration of value for illegal transfer of funds abroad and also introduced the concept of provisional assessment of export goods.



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