LAHORE: The Lahore High Court has held that the Anti-Money Laundering Act (AMLA) empowers the tax authorities to initiate criminal proceedings against taxpayers for the funds generated from the proceeds of crime.
The court said that, notwithstanding the tax statutes governing the determination of a taxpayer’s fiscal liability, the tax authorities may initiate criminal proceedings against taxpayers under the AMLA in respect of funds derived from an unlawful predicate offence.
The court passed this order in a number of petitions filed by taxpayers Mehmood Akbar and others challenging the registration of FIRs against them under AMLA.
The petitioners were of the view that the Ordinance, 2001, provides a complete mechanism for inquiry, assessment, appeal and recovery, therefore, the initiation of criminal proceedings without or during the pendency of such process of law leads to infringement of fundamental rights of due process and fair trial.
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The court said that the object of AMLA is materially different from the mere assessment of fiscal liability or recovery of tax and is specifically directed towards prevention of money laundering, the attachment and confiscation of property generated from proceeds of crime.
The court observed that at the outset, a distinction must be maintained between proceedings undertaken for assessment, determination and recovery of tax under the Ordinance, 2001 and criminal proceedings initiated under AMLA.
The court said, the scheme of AMLA envisages that prior conviction is unnecessary as the prosecution is still required to prove a case beyond a reasonable doubt that the assets in question are derived from an unlawful predicate offence activity.
The court said that the objection founded merely upon terminology used in the general criminal law, therefore, cannot override the mechanism specifically created by AMLA.
The court, therefore, observed that the offence of money laundering is inextricably linked to the predicate offence, therefore, the investigation must be conducted under AMLA.
The court remarked that where an offence is prima facie disclosed, the High Court cannot accept the appreciation of disputed documents in order to quash an FIR.
This court, while exercising constitutional jurisdiction cannot assume the role of an investigating agency and quash FIR, the court added.
The allegations in the cases are neither being accepted as established facts nor adjudicated upon by any court of competent jurisdiction, therefore, the alleged existence of such allegations as recorded in the FIRs cannot be construed as matters of computation of tax liabilities and consequently, it fails to lead us to a sustainable ground for quashment of FIRs, the court added.
The court, therefore, dismissed the petitions for being found against the merit and added that any finding by this court upon those matters at this stage would amount to entering into the merits of an incomplete criminal process, the court concluded.
Copyright Business Recorder, 2026