The Federal Board of Revenue (FBR) has stopped real estate businesses from making any deals or transactions with convicted individuals to meet Financial Action Task Force (FATF) conditions.
“We have been taking all necessary actions, including streamlining real estate businesses, to ensure compliance with the FATF conditions,” Asad Tahir Jappa, an FBR spokesperson, told a foreign media outlet.
He said his organisation is actively liaising with law enforcement agencies to prevent any criminal from pouring dirty money into the real estate sector.
“Implementation of the new directives and policies may take some time, but we have to ensure compliance and we are doing it,” he added.
Under the new regulations, a convicted person cannot be given a position at Designated Non-Financial Business and Professions (DNFBP) that include real estate agents, dealers in precious metals and stones, law firms, accounting businesses, and services that help set up companies on papers.
A convicted person cannot become a beneficial owner or hold a senior position in DNFBPs. Property businesses and other DNFBPs would also be required to inform the government if there was a change of beneficial owners or senior executives at these companies.
The FATF has identified these “non-financial” businesses as being susceptible to money laundering and terrorist financing due to the nature of their business and the transactions they may conduct. Real estate developers and agents top the list of “non-financial” businesses which explains why the government has made it compulsory for them to register with the FBR.
Pakistan’s real estate sector remains largely undocumented, raising international concerns it can be used for money laundering and terrorism financing.
Pakistan has been on the increased monitoring list of the global dirty money watchdog since June 2018 due to multiple strategic deficiencies in its financial system. The country is required to successfully implement an action plan to get itself removed from what is more popularly described as the FATF “grey list” of countries.