Latest news with #FacelessCustomsAssessment
Business Recorder
2 days ago
- Business
- Business Recorder
Probe into benami transactions, money laundering: FBR transfers spark controversy
KARACHI: Two senior Federal Board of Revenue (FBR) officials have been transferred from their posts in Karachi to Islamabad, sparking controversy over the future of ongoing investigations into alleged benami transactions and money laundering worth trillions of rupees in the vehicle imports. Although FBR officials termed the transfers/postings as routine administrative measures, this time, the transfers have raised questions about potential interference in high-stakes investigations, following the public allegation by one of the transferred officials that his posting was retaliation for taking action against powerful lobbies involved in vehicle imports. Abdul Hameed Abro, who was serving as Commissioner (Ops) Inland Revenue, Benami Zone-III in Karachi, was transferred after launching what he described as a comprehensive crackdown against benami transactions in vehicle imports. Old car importers: Anti-Benami zone of FBR initiates big crackdown In a social media post on his verified account, Hameed suggested his transfer was connected to his enforcement actions. 'When I took action against benami transactions and the misuse of baggage and gift schemes in the vehicle imports, it caused trouble to the powerful lobbies,' Hameed wrote. 'My only 'fault' was that I enforced the law and protected the national treasury. As a result, I was transferred from Karachi to Islamabad.' The commissioner defended his actions, saying that they were in the national interest and aimed at preventing billions in losses to the treasury through fake documentation and scheme misuse. 'I can be removed, but I cannot be defeated! I simply did my duty — and wherever I may be, this journey will continue,' he added. Under Hameed's leadership, the Benami Zone-III had launched an extensive investigation targeting the systematic abuse of the Vehicle Baggage and Gifts Scheme (VB&GS). The scheme, originally designed for legitimate personal imports, has allegedly been exploited by commercial importers working through clearing agents with suspected support from customs officials. The investigation covers vehicle clearances conducted between February 2018 and May 2025, with authorities demanding detailed explanations for thousands of vehicle imports processed under the personal baggage scheme. The Benami Zone has requested comprehensive documentation from suspected parties, including complete import records, customs declarations, details of end users and true owners with full identification, information on all transaction parties, copies of agreements and contracts, and bank statements covering the entire seven-year investigation period. In a parallel development, Sheeraz Ahmad, who was serving as Director of Post Clearance Audit (PCA), South, was also transferred to Islamabad. Ahmad had been actively involved in auditing Pakistan's most touted corruption-free clearance system - 'Faceless Customs Assessment (FCA)'. The PCA audit report under Sheeraz's supervision revealed significant irregularities, including widespread under-invoicing of high-value luxury vehicles. The audit found that importers consistently failed to provide documentation showing legitimate foreign currency payments, strongly suggesting the use of illegal hawala and hundi money transfer networks. 'Importers consistently failed to provide proof of payments substantiating that purchases of imported vehicles were made through legitimate remittances originating from foreign countries,' the audit report said. The investigation has uncovered what appears to be an organized scheme where importers systematically used illegal money transfer channels to pay actual purchase prices abroad while declaring minimal amounts to Pakistan customs to avoid duties and taxes. The PCA audit also detected approximately Rs 38 billion in revenue leakage following the implementation of the FCA system, attributed to several technical flaws identified in the audit report. While the FBR official sources termed the transfers are routine administrative measures, the timing and circumstances have raised concerns about the continuity of ongoing investigations. Both transferred officials are expected to continue their duties in their new postings in Islamabad, though questions remain about who will lead the ongoing investigations and whether the enforcement momentum will be maintained or, like other investigations, it will be shelved. Copyright Business Recorder, 2025
Business Recorder
5 days ago
- Automotive
- Business Recorder
‘Overseas Pakistanis are entitled to import vehicles under gift scheme'
ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday categorically clarified that only overseas Pakistanis are entitled to import vehicles under gift or transfer of residence schemes, which do not involve any outward remittance of foreign exchange from Pakistan. The FBR has also announced that all luxury vehicles have been assessed by Customs under the Faceless Customs Assessment (FCA) at higher assessed values without causing any loss of revenue. According to details released by the FBR on Thursday, Pakistan Customs has gradually expanded the scope and coverage of its Faceless Customs Assessment (FCA) to facilitate trade and minimise human interface in the clearance of goods from ports. Launched in December, 2024, the FCA has deprived many who thrived on the gains made from the old system. They have actively been maligning the FCA to secure its roll back. One such example is reported stating that Audit report has revealed large scale clearance of luxury vehicles at highly under-invoiced values in the FCA. In particular, example of a 2023 Toyota Land Cruiser has been given that was allegedly assessed at a petty value of Rs 17,635, in the FCA thereby causing huge loss to national exchequer. On the contrary, it is clarified that the said vehicle was assessed at Rs 10.05 million and an amount of Rs 47.2 million was recovered in duty and taxes. In fact all such vehicles have been assessed by Customs under the FCA at higher assessed values without causing any loss of revenue. The issue of trade based money laundering has also been alleged in import of these vehicles ignoring the fact that only overseas Pakistanis are entitled to such imports under gift or transfer of residence schemes. These schemes do not involve any outward remittance of foreign exchange from Pakistan. Besides, import of used vehicles in the same manner has been taking place even before the launch of the FCA. It is also important to mention that internal reviews and Audit of the FCA, which are often time quoted out of context, are being conducted by the FBR itself to ensure that gaps in this new system are timely identified and addressed. Copyright Business Recorder, 2025
Business Recorder
05-08-2025
- Business
- Business Recorder
IPO violation: FCA system clears banned goods worth Rs10.53bn
KARACHI: In violation of the Import Policy Order (IPO), the Faceless Customs Assessment (FCA), system has reportedly cleared the restricted/banned goods worth Rs10.538 billion. The audit, conducted by the Directorate General of Post Clearance Audit (PCA) between December 16, 2024, and March 15, 2025, revealed widespread violations of import regulations and massive duty evasion that had gone undetected by the FCA system, which was meant to be Pakistan's answer to customs corruption. The most alarming finding was the clearance of restricted/banned goods worth Rs. 10.538 billion through the FCA system, which was a direct violation of Import Policy Order (IPO) conditions. PCA audit report: FCA: Rs38bn revenue losses suffered in 3 months Over 1,006 Goods Declarations (GDs) involved restricted/banned goods that should never have been allowed through the old customs system, highlighting critical flaws in the FCA system. This clearance represents a fundamental breakdown of the FCA system's core function,' sources in customs said. 'The system was specifically designed to prevent such violations, but it failed,' they added. The audit also detected Rs. 5.007 billion in duty and tax evasion across just 1,524 GDs, averaging over Rs. 3.3 million in losses per declaration. More concerning was the failure to frame contravention cases as required by law, resulting in an additional Rs. 2.433 billion loss in statutory fines. The total revenue loss from these cases alone reached Rs. 7.44 billion, but the audit report suggested this may represent only the tip of the iceberg. The audit was conducted by just nine officers and this severe resource imbalance meant only 8.8 percent of total clearances could be audited, suggesting the actual scale of losses could be far greater. The audit report further said that around Rs. 30.364 billion was lost due to the non-framing of contravention cases as required under SRO 499(I)/2009. Less than 2% of high-value tax and duty-evading cases were officially booked, allowing massive revenue losses to go unpunished. The audit report also highlighted that around Rs. 60 million in duties and taxes were evaded after the cancellation of assessed and finalized GDs, and added that solar panel containers were cleared against unauthorized NTNs and Customs User IDs, raising trade-based money laundering concerns worth Rs. 643 million. The FCA system was launched last December 2024 with great fanfare as Pakistan's solution to endemic customs corruption, promising automated, transparent, and efficient trade facilitation. The system was designed to remove human discretion from customs assessment, theoretically eliminating opportunities for bribery and favoritism. However, these audit findings suggested that although the FCA may have reduced traditional corruption, it has created new vulnerabilities that are being systematically exploited on a massive scale, resulting in Rs. 38 billion revenue loss. Copyright Business Recorder, 2025
Business Recorder
05-08-2025
- Business
- Business Recorder
PCA audit report: FCA: Rs38bn revenue losses suffered in 3 months
KARACHI: Pakistan's much-touted Faceless Customs Assessment (FCA) system has suffered a massive revenue loss of Rs. 38 billion during just three months of operations, casting serious doubts over this corruption-proof digital reform. This was revealed in an audit report prepared by the Directorate General of Post Clearance Audit (PCA) for the period from December 16, 2024, to March 15, 2025. The audit was conducted by just nine officers covering the entire PCA South region, compared to over 100 officers facilitating FCA clearances. This severe resource imbalance meant only 8.8 percent of total clearances could be audited, suggesting the actual scale of losses could be far greater. According to the details, the PCA, South has examined 13,140 Goods Declarations (GDs) out of 149,086 total clearances, detecting irregularities in nearly one in every five transactions they have audited. The audit revealed multiple layers of revenue haemorrhaging across different categories of violations. A staggering Rs. 7.44 billion was lost through duty and tax evasion in just 1,524 GDs, averaging over Rs. 3.3 million per declaration. Additionally, Rs. 10.538 billion worth of restricted goods were cleared in violation of Import Policy Order conditions across over 1,006 GDs involving items that should never have passed customs. The most significant loss came from the failure to frame contravention cases as required under regulations, resulting in Rs. 30.364 billion in losses, with less than 2 percent of such cases being officially booked. The reported Rs. 38 billion figure excludes an additional Rs. 23 billion in statutory fines linked to smaller-scale duty evasions, suggesting the actual losses could be substantially higher. Among the most shocking revelations was the massive under-invoicing of luxury vehicles, with discrepancies reaching 91 percent. Out of 1,335 vehicle import GDs reviewed, declarations worth Rs. 670 million were enhanced to Rs. 7.254 billion during assessment, yet even these enhanced valuations were processed without proper verification of foreign remittances. The audit specifically highlighted cases like luxury Toyota Land Cruiser imports being declared at absurdly low values, raising concerns about potential money laundering through illicit channels. The audit also flagged over 4,973 import consignments, including solar panel containers worth Rs. 23.4 billion, that remained unclaimed at ports for unusually long periods, with some delayed by over two years. These containers were cleared on unauthorised National Tax Numbers and Customs User IDs, raising trade-based money laundering concerns worth Rs. 643 million. Even goods subjected to multiple assessment stages showed faulty processing, with 313 GDs wrongly assessed despite full oversight, leading to Rs. 2.11 billion in duty evasion. An additional 58 GDs that passed through Quality Assurance still resulted in Rs. 77.2 million losses, including cases of misclassification, illegal exemptions, undervaluation, and vague goods descriptions. The audit report further said that Pakistan's customs framework has become 'heavily tilted toward blind facilitation,' allowing repeated mis-declarations and tax evasions without accountability. The report warned that limiting visibility of GD particulars under FCA has undermined assessment quality, creating a 'structural lag in the taxation framework.' The PCA South audit report also urged the authority concerned for immediate action, including reinforcing audit directorates with qualified staff, rebalancing the FCA model to restore supervisory checks, digitally flagging GDs for mandatory contravention framing, and launching forensic probes into repeated GD re-filings. Copyright Business Recorder, 2025
Business Recorder
05-08-2025
- Automotive
- Business Recorder
Faceless Customs Assessment: Audit sparks concerns about under-invoicing
KARACHI: The import value of a 2023 Toyota Land Cruiser, typically worth millions, has been shockingly declared at just Rs 17,635 for customs clearance through the Faceless Customs Assessment (FCA) system, sparking concerns about massive under-invoicing in the luxury vehicle imports. This was revealed in an audit report compiled by the Directorate General of Post Clearance Audit (PCA) on the FCA system for the period between December 2024 and March 2025. The audit report has uncovered one of Pakistan's largest trade-based money laundering schemes in luxury vehicle imports, involving systematic under-invoicing of imported luxury vehicles, with some cases showing gross undervaluation of nearly 100 percent. Internal review describes FCA system as 'a complete failure' The PCA, South auditors have examined 1,335 Goods Declarations for luxury vehicle imports where the difference between declared and assessed duties exceeded Rs 1 million, clearly indicating high under-invoicing in the imports of high-value luxury vehicles. The audit report revealed that across all 1,335 cases examined, importers collectively declared just Rs 670 million as the import value of the vehicles while the actual assessed values totalled Rs 7,254 million or Rs. 7.254 billion. The fraudulent declarations resulted in initial duty payments of only Rs 1.293 billion when the legitimate tax liability should have been Rs 18.78 billion. Despite these massive discrepancies being identified during assessment, customs officials failed to demand proof that vehicle purchases were made through legitimate foreign exchange remittances as required by Pakistani import regulations. 'In every single case reviewed, importers provided no documentation showing foreign currency payments, strongly indicating the use of illegal Hawala and Hundi networks originating from Pakistan,' the audit report said. 'These aren't isolated incidents of clerical errors,' customs sources said. 'We're looking at an organised scheme where importers systematically used illegal money transfer channels to pay actual purchase prices abroad while declaring minimal amounts to Pakistani customs to avoid scrutiny.' The audit revealed that an importer declared a 2023 Toyota Land Cruiser, which featured a 3,444cc engine and was imported from Japan, at a mere Rs 17,635. However, when customs officers conducted their assessment, they determined the vehicle's actual value to be Rs 10,049,868, with total leviable duties and taxes amounting to Rs 47,214,182, representing a staggering 99.8percent under-invoicing in vehicle imports. The PCA auditors also identified a disturbing recurring pattern where importers systematically understated vehicle values to reduce initial duty payments, a practice that not only resulted in short-payment of taxes but also led to deliberate under-valuation of assets in Income Tax Returns. The audit report highlighted that importers consistently failed to provide proof of payments substantiating that purchases of imported vehicles were made through legitimate remittances originating from foreign countries. In the absence of such documentation, the report said that the use of illicit channels such as Hawala and Hundi networks, originating from Pakistan, cannot be ruled out. Under customs rules, the vehicle import payments must be made through official remittances from foreign countries, making the lack of proper documentation particularly concerning. The significant discrepancies between declared and assessed values, combined with the vast gaps between declared and assessed duties and taxes, have raised serious red flags about the widespread and systematic nature of this fraudulent practice. The audit report termed these activities as a high-risk Trade-Based Money Laundering scheme, posing a serious threat to Pakistan's financial system. These findings emerged at a critical time when Pakistan is actively working to strengthen its anti-money laundering frameworks and improve compliance with international financial standards set by organizations such as the Financial Action Task Force and the International Monetary Fund (IMF). Meanwhile, sources said that the audit report has been forwarded to relevant authorities for comprehensive investigation and prosecution of the identified cases and added that the Federal Board of Revenue (FBR), along with other regulatory bodies including the State Bank of Pakistan and the Financial Monitoring Unit, are expected to take immediate coordinated action to address the systemic vulnerabilities in the luxury vehicle import assessment process and strengthen controls to prevent such future exploitation of the system in future. Copyright Business Recorder, 2025
