FBR Mandates DNFBP Requirement for Real Estate Sector

The Federal Board of Revenue (FBR) has barred all real estate development authorities and cooperative housing societies/schemes/firms from conducting the business of immovable properties till they are registered as Designated Non-Financial Businesses and Professionals (DNFBPs). Registering DNFBPs is a condition in the action plan of the Financial Action Taskforce (FATF).

According to a research report by leading tax expert, Ashfaq Tola, on the Designated Non-Financial Businesses and Professionals (DNFBPs), all real estate development authorities, cooperative housing societies, and all other housing societies, schemes, and firms dealing in real estate were informed that no public or private development authority shall conduct business activities with any real estate agent for the transfer/registration of immovable property unless the agent is registered as a DNFBP and should possess a registration certificate from the concerned Director DNFBP. Failure to register as a DNFBP would result in actions and measures as set out by AMLA.

The FBR was empowered by the Anti-Money Laundering Act, 2010, (AMLA) to issue licenses or register Designated Non-Financial Businesses and Professionals and to impose any conditions on any activities by them, to prevent money laundering or terror financing.

DNFBPs are businesses or professions that are not financial institutions but may pose a risk of money laundering or terror financing.

The FBR has also listed Red Flag Indicators on their website for the real estate sector, precious metals/stones dealers, accountants, and targeted financial sanctions related to Terrorism Financing (TF) and Proliferation
Financing (PF) (provision of funds or financial services used to manufacture/ acquire/ export nuclear/chemical/biological weapons) where the matter is not only explained in depth but also guides the DNFBPs in their course of action if one or more than one red flags is highlighted. It is pertinent to mention that the indicators provided on the website are in addition to the red flags published by the FMU or international stakeholders.

As Pakistan is currently undergoing the proceedings of FATF, it is also our social and moral responsibility to ensure that the guidelines provided are complied with as it forms the backbone of our statutory duty. Entities should also evaluate themselves whether or not they fall under the said requirements and should be aware of the mode and methodology of informing the appropriate authorities, the report by Ashfaq Tola added.



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