The Federal Board of Revenue (FBR) in Pakistan has uncovered one of the country’s largest financial scandals involving money laundering and under-invoicing within the trade sector.
Following a meticulous investigation by auditors, the FBR initiated legal action against two companies headquartered in Peshawar. Shockingly, it was revealed that these entities were engaged in an extensive money laundering operation, amounting to a staggering Rs47 billion. This operation was officially classified as ‘trade-based money laundering.’
The FBR’s report indicates that these companies allegedly orchestrated under-invoicing transactions, all under the guise of trading solar panels. This deceitful activity resulted in a colossal financial loss of Rs25 billion to the national exchequer.
In the First Information Report (FIR), the owners of these companies, Moon Light Traders and Bright Star, were named as suspects. The investigation further unveiled that Bright Star had been involved in under-invoicing practices dating back to 2013. Auditors meticulously scrutinized records encompassing 705 Goods Declarations (GDs) associated with Moon Light Traders.
Even more concerning, it was disclosed that these companies persisted in their money laundering activities from 2017 to 2022. Subsequently, the FBR promptly shared its comprehensive report on trade-based money laundering and under-invoicing with the Caretaker Prime Minister, Anwaarul Haq Kakar.
In a separate incident that transpired in September, the FBR exposed an enormous tax fraud, amounting to Rs314 billion, orchestrated by a fictitious entity named K H & Sons. This fraudulent scheme was unveiled by the Director-General of Internal Audit at Inland Revenue’s team.
Notably, K H & Sons operated as a paper company registered under the name of a benami individual, Muhammad Kashif. Their fabricated documents falsely portrayed involvement in the iron and steel sector, employing addresses associated with legitimate markets such as Liaquat Market, Agri Market, and M.A. Jinnah Market.
Sources have also revealed that this sham company was exploited for various illicit activities. Intriguingly, despite the scale of the tax fraud, the FBR had not initiated legal action against the culprits. This situation raised concerns that the perpetrators might attempt to flee the country unless a First Information Report (FIR) was promptly filed.
