Financial Monitoring Unit reports Fakhr-e-Alam of M/s Zor Trading Co. for evasion, smuggling and money laundering

KARACHI: The Financial Monitoring Unit (FMU) of the State Bank of Pakistan (SBP) has reported Fakhr-e-Alam s/o Ghulam Nabi of M/s Zor Trading Company for tax evasion, tyre smuggling and money laundering to Inland Revenue Intelligence & Investigation- FBR.

Fakhr e Alam is the permanent resident of Khyber Agency while currently residing in Karachi and deals in tyres at as a proprietor of M/s Zor Tradin Co located at Lakson Square, Building No.1, Sarwar Shaheed Road, Karachi since 2011.

It was observed by Samba Bank Limited that Rs. 128 million & Rs. 113 million were received in the accounts of Fakhr e Alam from the individuals Murad Khan and Sahib Khan (s/o Murad Khan) during the period September 2016 – December, 2017 through hundreds of cheques.

Samba Bank Limited inquired Fakhr e Alam about the source and purpose of the funds received in the above mentioned accounts whereupon he informed that those funds were the sale proceeds of the property. However, he refused to share any documentary evidence with the bank to justify the receipt of funds.

Fakhre Alam had also received funds amounting to Rs. 3.22 million and Rs. 7.0 million in his two accounts from an entity named “New Mushtarka Tyre Dealer” on different dates during 2016 and 2017. The purpose of the funds received as stated by Fakhre Alam was profit from the business named “New Mushtarka Tyre Dealer”.

However, the provided information related to the funds received in the account appeared to be uneven as previously he had not provided/declared that he owned stakes in the aforesaid business.

During 02-06 December and April – December 2017, a sum of Rs20 million and Rs121 million respectively were issued to the business M/s Rahman Tyres International Pvt Ltd through 119 clearing cheques, which were generally issued in structured manner mentioning similar amounts.

Upon inquiring the details, customer informed that he is investing funds in the business from his personal savings. FMU noted investment of funds in the business through series of cheques mentioning similar amount of funds appear to be irrational.

Bank is unclear on the account activity as account turnover appear to be inconsistent with customer recorded transaction profile, Fakhr e Alam is reluctant to share the complete details and evidence regarding the source of funds received in the account.

The detail of the accounts effected for high value currency transactions show that Fakhr e Alam has also been maintaining multiple accounts with other banks, with an aggregate turnover of Rs1.034 billion (credit) and Rs1.15 billion (debit) in three years. Heavy funds were routed through the accounts, which do not commensurate with Fakhr e Alam’s profile.

Comparing the turnovers in the accounts maintained by Fakhr e Alam and his counterparties with the amount of taxes paid by them, it becomes clear that taxes paid by them are on lower side.

As per the information available publicly on the internet, imported and smuggled tyres are a hot commodity in Pakistan and are in a great demand by the consumers in the country. Shuba Bazar is generally considered as hub of smuggled items vehicles related items. Tyres are smuggled from Afghanistan through Torkham to Peshawar and from there distributed to the different parts of Pakistan. Moreover, as per business details of Fakhr e Alam provided on his NTN, he is doing business as tyre commission agent in Shuba Bazar, Peshawar.

According to FMU, he might be the distributor of smuggled tyres sending consignments to the individuals including Murad Khan and his son Sahib Khan who are running entities namely “New Mushtarka Tyre Dealer” and “Khyber Afridi Tyre Dealer” located at Shireen Jinnah Colony and Old Truck Stand Mari Pur Road Karachi, respectively.

Murad and Sahib Khan had not paid income tax despite the fact that they have been routing heavy volume of funds in their respective accounts.

Keeping in view the detailed discussion and the red flags identified, it has come to light that Fakhr e Alam and his counterparties are routing heavy funds in their respective accounts while they are doing the business of tyres which is vulnerable to smuggling. Moreover, the individuals have paid no or nominal amount of taxes despite the fact that they have routing heavy amounts of funds. Therefore, the financial intelligence is being shared with FBR-Customs and I&I-Inland Revenue on account of smuggling and tax evasion under the provision of AML Act, 2010 for the measure deemed appropriate.

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