Islamabad: The Federal Board of Revenue has issued notices to 22,000 property dealers across Pakistan directing them to get registered on the board’s website as Designated Non-Financial Businesses and Professions (DNFBPs) in order to comply with the Financial Action Task Force (FATF) requirements – a news source reported on February 18.
The taxation agency has further asked real estate agents, jewellers, brokers, housing authorities, and developers to report all suspicious transactions to it. It intends to take action against culprits based on the Suspicious Transaction Reports (STRs).
FBR’s Financial Monitoring Unit (FMU) has prepared a list of red flags for ascertaining money laundering or terror financing in order to comply with FATF requirements. These will then be used in combination with analysis of overall financial activities and client profile. These indicators include:
- Where purchase/seller’s economic profile does not match with the cost of property
- Sources of funds cannot be identified or remain unclear
- The client or transaction is from a country or jurisdiction where FATF has called for countermeasures or enhanced client due diligence measures, or if the jurisdiction has inadequate measures in place for prevention of money laundering and terror financing
- The client or any of its associated person/entity is flagged as a result of screening against UN Security Council Resolutions (UNSCRs)
- Purchaser/seller is linked to negative news or nominated in a news report in relation to a crime or if they are under law enforcement investigation/inquiry
- Clients who appear to be acting on somebody else’s instructions without disclosing the identity of such persons
- Unexplained delegation of authority by the client by using power of attorney
- Purchaser/seller appears to be acting as proxy for the purchase of properties and makes attempts to conceal the identity of beneficial owner
- Politically exposed client who is linked to negative news/crime or any client who is member or close associate of such politically exposed person
- Purchaser/seller provides an address that is unknown, believed to be false, or simply a correspondence address
- Purchaser/seller respectively buys and sells multiple properties in short time period
Consequently, Real Estate Consultants Association (RECA) DHA has reached out to the authorities concerned including Minister for Finance Dr Abdul Hafeez Shaikh, Special Assistant to PM on Revenue Dr Waqar Masood, FBR Chairman Javed Ghani on the matter.
Their contention is that real estate agents with their limited knowledge of laws and technicalities are not particularly suited for the job. They have also argued that the terms such as Customers Due Diligence (CDD), Enhanced Due Diligence (EDD) and Simplified Due Diligence (SDD) are vaguely defined in the SRO. The letters sent to the authorities also point out that the penalties for failing to do Know Your Customer (KYC) are ‘ruthless’.
Speaking to the media, Real Estate Consultants Association DHA Secretary General Ahsan Malik had proposed that the government should deploy FBR officials in all property registration offices across the country.
He also proposed that the FBR should provide a standard brief and simple pro forma for the purpose so the real estate consultants and property dealers could comply with it.