FBR starts getting details of bank accounts

KARACHI: The Federal Board of Revenue (FBR) has started receiving details of transactions directly from banks central database, which is key to help identify cases of money laundering and terror financing, sources in the revenue authority said on Thursday.
From the 1st of this month the banks are transmitting details of transactions of Rs1 million or more to the FBR on a real-time basis, the sources said.
The prime purpose of accessing the details of transactions is to ensure documentation of the economy, an officer of the FBR said on the condition of anonymity. The official said the details would help identify the utilisation of money, especially in hawala and hundi, drugs and illicit weapons.
“The FBR will flag any abnormal transaction made to an account or to a person for further proceedings,” the official said.
The terror attack on a school in Peshawar - leaving hundreds of innocent students and school staff dead - has united the nation and all the government functionaries are endeavouring to choke terror financing and identify the sympathisers of terrorists.
Accessing the bank account was longstanding demand of the FBR, but due to one reason or another, the financial institutions were reluctant to share their depositors’ details under the shelter of the secrecy laws.
Through the Finance Act, 2013, amendments were introduced to the Income Tax Ordinance, 2001, authorising the revenue authority to access the detai9ls of the depositors. The issue was under litigation for over a year.
However, recently the courts lifted the stay paving the way for the FBR to obtain information, the sources said.
Under Clause (a) of sub-section (1) of Section 165 A, a bank is required to provide information through online access to its central database containing details of its accountholders and all transactions made in their accounts.
The banks were contacted, but they were reluctant to comment on the subject.
The latest information sharing will include all the transactions made within the country or abroad, the FBR official said. The official said the information sharing would only help detect transactions made after January 1, 2015.
Prior to this, the Directorate of Broadening of Tax Base issued instructions to the Large Taxpayers Units (LTUs) to obtain information of those depositors, who have made transactions of over Rs5 million in a year. The LTUs have also been asked to provide details of such depositors for transactions made during the last three years.
The FBR also activated the Directorate of Intelligence and Investigation to monitor all suspicious transactions meant for tax evasion. The directorate in Karachi recently made some detection of transactions in banks, as well as the stock market.
According to an estimate, the informal economy in Pakistan is almost equal to the formal one.
The revenue authority has estimated the informal economy to be around 44 percent of the GDP. A research report of Pakistan Institute of Development Economy (PIDE) for 2007/08 had estimated it at 91.4 percent, stating it was still an underestimated figure since the investment data was not adjusted.