New regime proposed to counter trade based money laundering

KARACHI: Money laundering is a menace and source of bad publicity and economic cost; therefore the government of Pakistan has proposed a completely new regime to curb the practice of trade-based money laundering.

In order to control trade-based money laundering and mis-declaration of value for illegal transfer of funds abroad, the government vide Finance Bill 2019-20 had added section 32C in the Customs Act 1969.

“Without prejudice to any action that may be taken under this Act or any other law for the time being in force, if any person overstates the value of imported goods or understates the value of exported goods or vice versa, such person shall be served with a notice within a period of two months from the seizure of goods to show cause as to why such goods may not be confiscated,” the proposed section noted.

The provision suggests that goods imported through under-invoicing or over-invoicing and under-stated value of exported goods would be out rightly confiscated.

Moreover, a new separate Directorate of Cross Border Currency Movement has also been established for focused enforcement against money laundering and currency smuggling to reflect Pakistan’s commitment towards fulfilling FATF’s action plan. In order to further strengthen drive against smuggling in the border areas, separate preventive collectorates have been established in Karachi, Peshawar and Quetta.

Pakistan customs, like other modern customs administrations, has been using risk management system to expeditiously clear cargo through an automated system. In order to provide a more comprehensive legal cover to the use of risk management as a tool throughout customs controls, detailed legal provisions are being proposed to be added in the Customs Act.

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