During a Senate Standing Committee on Finance briefing, Pakistan’s tax chief revealed a Rs 70 billion money laundering scheme involving two solar panel importers and five commercial banks.
Amjad Zubair Tiwana, the Chairman of the Federal Board of Revenue (FBR), disclosed the trade-based money laundering scheme, detailing the transfer of funds to destinations such as Switzerland and Singapore against solar panel imports from China.
The FBR investigation exposed that Rs69.5 billion was laundered to countries like Switzerland, Singapore, and the UAE, with five major commercial banks facilitating the process through heavy cash transactions. Notably, M/s Bright Star transferred Rs47 billion out of Pakistan for solar panel imports without filing income tax returns, while M/s Moonlight Traders transferred Rs23.7 billion overseas despite having a weak financial position.
The FBR’s scrutiny of 63 importers suggests that the overall money laundering amount could be between $2 billion to $2.5 billion over the past five years. The State Bank of Pakistan (SBP) faced criticism for its passive role, with calls for action against the banks involved. The report indicated that commercial banks allowed import remittances to third countries without the required no objection certificate from Chinese exporters, violating foreign exchange regulations.
The FBR’s findings also revealed a high disparity between the financial worth and import values of 39 importers, highlighting potential money laundering considerations. The scrutiny exposed a surge in solar panel imports from 2017 to 2022, accompanied by the emergence of shell and dummy companies exploiting duty and tax-free imports for illicit financial activities.
So far, eight FIRs have been registered against dummy companies, with funds transferred to a Dubai-based company against imports from China. The standing committee commended the FBR’s findings and pressed the SBP to conduct a detailed review, demanding information on actions taken against the involved commercial banks.