Real estate agents, jewellers and accountants: FBR to regulate sectors to check money laundering

ISLAMABAD: The Federal Board of Revenue (FBR) would regulate real estate agents, jewellers, and accountants to check money laundering/terrorist financing in these sectors. The board has directed them to get registered with the FBR and ensure Customer Due Diligence (CDD).

The FBR has issued SRO 924(1)/2020 to notify the Federal Board of Revenue Anti-Money Laundering and Countering Financing of Terrorism Regulations for the Designated Non-Financial Businesses and Professions (DNFBPs) 2020.

By issuing these regulations, the FBR has timely complied with the technical compliance requirement of the Financial Action Task Force (FATF).

Within the FBR, the responsibility would be given to the Inland Revenue Service (IRS) Wing because they are the most relevant arm of the FBR, which can carry out all these activities as per the FATF requirements and standards.

All these businesses are already reporting to the FBR's Inland Revenue Wing in the shape of various returns and withholding statements. Sources said that the FBR was also expected to create a separate Directorate General for dealing with the sectors of real estate agents, jewellers, and accountants, and capacity building of the concerned officials. The FBR officials are dealing with the Income Tax Ordinance 2001, Sales Tax Act 1990, the Federal Excise Act and Customs Act 1969.

Now an additional responsibility has been rested upon the FBR under the Second Amendment AML Act.

The FBR will also deal with the registration and licensing of the real estate agents, jewellers, and accountants.

The scope, powers and functions of the FBR has been enlarged after issuance of the Anti-Money Laundering and Countering Financing of Terrorism Regulations for DNFBPs, 2020.

Under the regulations, every DNFBP shall be registered with the board.

The DNFBP shall provide any information or documentation that may be required by the board for the purposes of registration or keeping the DNFBP registration up-to-date, including but not limited to criminal records of the senior management and beneficial owners.

About the Customer Due Diligence (CDD) and Beneficial Ownership, the real estate agents, jewellers, and accountants, shall conduct CDD in the circumstances and matters set out in Section 7A(1) of the AML Act, when they engage in the following activities; Real Estate Agents, when they are involved in transactions for a client concerning the buying and selling of real estate; Jewellers and Dealers, in precious metals and stones when they engage in any cash transaction with a customer or client equal to or above Rs2 million; and accountants, when they prepare for, or carry out, transactions for their clients concerning the activities described in Section 2(xii)(c) and (d) of the AML Act.

The DNFBP shall identify the customer whether entering into a business relationship or conducting an occasional transaction, and whether natural or legal person or legal arrangement, and verify that customers identity using reliable, independent sources documents, data or information as required under these regulations.

The DNFBP shall identify the beneficial owner and take reasonable measure to verify the identity of the beneficial owner by using reliable and independent document, data or sources of information.

The DNFBPs shall take appropriate steps in accordance with Section 7F of the AML Act to identify, assess, and understand their risks for customers, countries or geographic areas, and products, services, transactions or delivery channels. The DNFBPs shall: have policies, controls and procedures, which are approved by senior management, to enable them to manage and mitigate risks that have been identified in its own risk assessment and any other risk assessment publicly available or provided by the FBR; monitor the implementation of those controls and to enhance them if necessary; and take enhanced measures to manage and mitigate the risks where higher risks are identified. The DNFBP may take simplified measures to manage and mitigate risks, if lower risks have been identified.

Simplified measures shall not be permitted, whenever there is a suspicion of ML/TF.

About the record keeping, the records maintained by the DNFBPs as set out in Section 7C of the AML Act shall be sufficient to permit reconstruction of individual transactions including the nature and date of the transaction, the type and amount of currency involved and the customer involved in the transaction so as to provide, when necessary, evidence for prosecution of criminal activity.

The real estate agents, jewellers, and accountants shall keep a list of all such customers where the business transaction was refused or needed to be closed either on account of failure of the customer to provide the relevant documents or the original document for viewing as required.

The record to be maintained and furnished by the accountants, real estate agents, and jewellers under these rules and as required by the AML Act shall be subject to inspection by the FBR, as laid down in Section 6A(2)(f) of the AML Act, who may be assisted by other law enforcement agencies.

Any violation of any provision of these regulations shall be subject to sanctions issued under the AML Act, the FBR added.

Copyright Business Recorder, 2020