In Pakistan, trade-based money laundering falls under the jurisdiction of Customs Intelligence and Investigation (I&I), while hawala-hundi activities are overseen by the Federal Investigation Agency (FIA), according to Gazette Notification in 2011.
Recently, Customs I&I, with the assistance of sensitive agencies and other entities, has been instrumental in detecting numerous money laundering cases. These efforts have significantly helped Pakistan avoid being placed on the Financial Action Task Force’s (FATF) grey or black list.
However, as Customs I&I undergoes transformation, these cases are not being actively pursued. The current inactivity and lack of authority in prosecution by Customs I&I have led to a situation where the judiciary is compelled to release the culprits. This underlines the urgent need for a Customs General Order (CGO) to clearly define the job description and responsibilities of Customs I&I.
The Federal Board of Revenue (FBR) had previously notified that any cases involving amounts of Rs 5 million and above should lead to the lodging of a First Information Report (FIR). Unfortunately, this directive has not been effectively implemented.
Money laundering extends beyond trade-based or import-based activities. Smuggling consignments intercepted in Pakistan should involve two FIRs: one for smuggling under the jurisdiction of field formations, and another for money laundering by I&I. This approach is necessary because payments for smuggled goods are often laundered and do not pass through legal channels, posing severe challenges for smugglers.
The situation underscores the need for clear jurisdiction, effective prosecution mechanisms, and the enforcement of existing regulations to combat money laundering and smuggling effectively. It is crucial for the relevant authorities to address these gaps to ensure the integrity of Pakistan’s financial system and adherence to international standards.