FBR barred from seeking banks’ data

KARACHI: Government disallowed the Federal Board of Revenue (FBR) from seeking suspicious transactions and written-off loans reports from banks, in the recently-approved mini-budget, officials said on Wednesday.

The officials said banks and other financial institutions were required to provide the FBR with currency transaction and suspicious transaction reports under the Income Tax Ordinance 2001.

Further, the banks were also required to provide a consolidated list of written-off loans exceeding one million rupees in a year.

“Both these conditions have been abolished through an amendment into the ordinance,” an official said, requesting anonymity.

The National Assembly approved Finance (Supplementary) Bill 2018 on October 3 to bring changes in the budget for the current fiscal year of 2018/19.

A FBR official said the assembly approved the amendment into Section 165A, which makes banks responsible to share accountholders details.

The official said banks told the finance ministry that the requirements were redundant as the banks were compliant in submitting such details to the State Bank of Pakistan.

The official said the government barred the banks from obtaining details to resolve litigation issues filed by the banks.

Earlier this week, the central bank asked the financial institutions to ensure that customers’ confidential data should not be disclosed to unauthorised officials.

“Section 33A of the Banking Companies Ordinance, 1962, inter alia, requires that bank / financial institution shall not divulge any information relating to the affairs of its customers except in circumstances in which it is, in accordance with law, practice and usage customary among bankers, necessary or appropriate for a bank to divulge such information,” the SBP said in a statement. “It has, however, been observed that the above directives envisaged under the law are not being meticulously followed.”

The official said the Directorate of Intelligence and Investigation Inland Revenue FBR is authorised to conduct scrutiny of tax evasion in cases of money laundering.

The directorate is already in liaison with the SBP and Financial Monitoring Unit to obtain details, the official added.

The official said although some restrictions were eased for banking companies the approved finance bill introduced another restriction under which banks would provide details of profit on debt.

Under the new law, the banks are bound to provide details of their accountholders receiving profit on their deposits exceeding one million rupees for filers and Rs500,000 for non-filers in a year.