Suspicious Transaction Reports: Transactions in four professions to come under scrutiny

ISLAMABAD: Pakistan is bound to scrutinise transactions of four Non-Designated Financial Businesses and Professions (DNFBPs) — including real estate agents, jewelers, lawyers, and accountants — for generating Suspicious Transaction Reports (STRs) about their respective customers, an official said. Other stern actions may also be taken in case of failing to comply with the new action plan of the Paris-based Financial Action Task Force (FATF).

Pakistan is now bound to take stern actions for imposing sanctions through effective monitoring in the shape of slapping penalty and sealing business premises after issuing notices to those failing to comply with the FATF requirements.

The STRs will be generated against those customers who will fail to satisfy their financial worth for buying any asset with the assistance of real estate agents, jewelers, lawyers and accountants.

The Federal Board of Revenue (FBR) has already established DNFBPs unit under the Intelligence & Investigation (I&1) Inland Revenue Service (IRS) and so far sent out notices to 50,000 real estate agents, jewelers, and accountants, while the lawyers’ representative bodies would devise a mechanism in consultation with the FBR to comply with the international watchdog requirements. In a written notice sent out to the real estate agents in March 2021, the FBR’s DNFBP outfit stated that a questionnaire was sent to them for timely submission under Ant Money Laundering Act (AMLA) 2010 but they failed to submit the same despite reminders. “You are provided with the last opportunity but in case you fail, any default may draw you to the high risk, and sanction may be imposed,” reads the notice.

The FBR made it clear three contraventions were made including failure to get registered as DNFBP, delay in submission of off-site monitoring questionnaire and non-implementation of rules and regulations issued vide SRO-924 (1) 2020. In future, your compliance will be checked through on-site inspection by our inspection teams against the aforementioned legal provisions. Any default may entail the imposition of sanctions as mentioned in SRO-950 (1) 2020. Now the FBR’s DNFBP high-ups have decided to kick-start on-site inspection of office premises of real estate agents from the next fiscal year starting from July 2021.

Pakistan is a unique country where the FATF and the Asia Pacific Group (APG) undertook two different processes simultaneously despite Islamabad’s request to defer one process but no one bothered to accommodate our justified demands.

On the one side, Pakistan was placed into the grey list in June 2018 and asked to comply with 27 action plans and come out of it within one year, on the other Pakistan was selected for Mutual Evaluation Report (MER) in 2019 by the APG to assess whether it made progress to implement 40 recommendations to combat money laundering and counter terrorist financing.

In the first report, the APG identified close to 100 deficiencies and within 10 months, the APG in its progress report admitted that Pakistan was largely compliant on 31 recommendations out of total 40. “We made more progress and now only 7 points left to come out from the grey list,” said the official. In order to comply with the new set of FATF demands, Pakistan should continue to work to address its strategically important AML/CFT deficiencies, namely by: (1) enhancing international cooperation by amending the MLA (Mutual Legal Assistance) law; (2) demonstrating that assistance is being sought from foreign countries in implementing UNSCR 1373 designations; (3) demonstrating that supervisors are conducting both on-site and off-site supervision commensurate with specific risks associated with DNFBPs, including applying appropriate sanctions where necessary; (4) demonstrating that proportionate and dissuasive sanctions are applied consistently to all legal persons and legal arrangements for non-compliance with beneficial ownership requirements; (5) demonstrating an increase in ML investigations and prosecutions and that proceeds of crime continue to be restrained and confiscated in line with Pakistan’s risk profile, including working with foreign counterparts to trace, freeze, and confiscate assets; and (6) demonstrating that DNFBPs are being monitored for compliance with proliferation financing requirements and that sanctions are being imposed for non-compliance.

Now the government will have to enhance international cooperation for taking actions against those involved in money laundering and terror financing and second it will have to demonstrate its political will to take actions against In other countries, casinos are also included under the definition of DNFBPs but it was excluded in case of Pakistan because it did not exist in the country.