Realtors and jewellers: FBR to act as 'regulator' to check money laundering

ISLAMABAD: In a major development, the government has decided to designate the Federal Board of Revenue (FBR) as regulator to check money laundering/suspicious transactions within the Designated Non-Financial Business and Professions (DNFBPs) particularly monitoring of real estate agents, housing authorities, real estate developers/builders, property dealers, and jewellers/gem dealers.

Sources told Business Recorder here on Tuesday that the decision had been taken by the government, and once the amendment in the Anti-Money Laundering Act, 2010, had been approved by the Parliament, the AML Act would be amended.

The issue of regulator of the DNFBPs was also discussed, during a recent meeting of the FBR. The tax authorities were of the view that the FBR was one of the best regulators under the Anti-Money Laundering Act, 2010.

As compared to the other government departments such as the Federal Investigation Agency (FIA) or provincial governments etc, the FBR can play its key role in regulating the DNFBPs provided it was equipped with the necessary resources.

In case of the DNFBPs, the FBR would be the most suitable regulator for the DNFBPs under the Anti-Money Laundering Act, 2010, as the FBR has already developed reporting mechanism with the Financial Monitoring Unit (FMU), and other designated agencies under the AML Act, they said.

According to the sources, the FBR may designate Directorate General Intelligence and Investigation Inland Revenue or Customs for working as regulator for the DNFBPs.

Under the Anti-Money Laundering Act, 2010, the DNFBPs covers real estate agents, including housing authorities, builders, real estate developers and property dealers; dealers in precious metals and precious stones, including jewelers and gem dealers; lawyers, notaries, other legal professionals, accountants, trusts and company service providers etc.

According to a notification of the Finance Division of December 23rd, 2019, the General Committee had notified the following authorities as the AML/CFT regulatory and supervisory authority for DNFBPs Sector.

The FBR is the regulatory authority for precious metal/gem dealers and real estate agents.

Under the SRO 1320(1)2019, the FBR has decided to completely document business of real estate agents and jewellers, who would be required to maintain record of actual beneficial owners of immovable properties and jewellery, respectively, and report all suspicious transactions of their buyers/sellers to the FBR.

The FBR has issued special instructions regarding books of accounts, documents and records to be maintained by real estate agents/jewellers and reporting of suspicious transactions.

Under the monitoring and compliance provisions, the record to be maintained and furnished by the real estate agents/jewellers shall be subject to spot inspection by income tax authorities, who may be assisted by other law enforcement agencies.

Where the record is not maintained in the prescribed form, the business license of the real estate agents/jewellers shall be suspended forthwith, pending further investigation into the matter.

Sources added that the AML Act and all the FBR's rules and notifications would be suitably amended following designation of the FBR as prime agency for the DNFBPs.

Moreover, the FBR will also issue new rules and regulations under the AML Act for this purpose.

Copyright Business Recorder, 2020