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Curb on terror financing, money laundering: Finance Bill likely to spell out measures

Curb on terror financing, money laundering: Finance Bill likely to spell out measures

ISLAMABAD: To effectively curb money laundering and do away with ways of terrorism financing, the government is contemplating introduction of certain provisions to create an interface among the Income Tax Ordinance 2001, Sales Tax Act, 1990 and Federal Excise Act, 2005 in Finance Bill 2014-15.

According to details, the government is planning to create an interface between the Inland Revenue Laws (IRLs) and Anti-Money Laundering Act based on the findings of a study. Currently, the AML Act, 2010 explicitly excludes ‘Fiscal Offences’ – Tax crimes) from its purview, which should be brought within its scope by allowing the FMU to have access to income tax information.

According to reports, the Financial Monitoring Unit (FMU) has requested the FBR to indicate serious tax crimes for inclusion as predicate offences in AML Act, 2010 schedule and was also decided in the National Economic Council (NEC) meeting held on January 10, last.

The FBR initiated a study proposal with the objective that in the light of international bodies (FATF/Egmont Group/APG) guidance, the FBR and FMU should conduct the study for an interface between Inland Revenue Laws i.e Income Tax Ordinance, 2001, Sales Tax Act, 1990 and Federal Excise Act, 2005 and the Anti Money Laundering Act, 2010 to effectively control money laundering and terrorism financing. The views of legal consultant and FMU have been dispatched to the FBR and now partially revised study was again sent by the FBR to the departments concerned. The final recommendations of the study agreed it may be legislated by the Parliament by the end of the FY 2013-14 through Finance Bill.

As per sources, the queries raised in the study to seek clarity are: Tax evasion keeps on occurring but remains within, the ambit of tax laws, when does a tax evasion be liable for cognizance under the AML Act, which provisions of fiscal laws with respect to tax evasion be considered as predicate offences under AML Act etc.

Study on improving compliance with fiscal laws and anti money laundering law is supported. However, clarity to the study contents/substantive aspects and precise objects to be met, are the prerequisites.

The FBR has reviewed the entire anti-money laundering law for inclusion of serious tax crimes (direct taxes and indirect taxes) in the Anti-Money Laundering Act 2010. The move would be instrumental in controlling money laundering involving duties and taxes evasion under Income Tax Ordinance 2001, Federal Excise Act 2005 and Customs Act, 1969.