ISLAMABAD: Officials from the Federal Board of Revenue (FBR) revealed to the Senate Standing Sub-Committee on Finance and Revenue that commercial banks played a key role in facilitating a massive money laundering scheme, involving over Rs. 117 billion worth of solar panel imports.
The Revenue Division uncovered over-invoicing to the tune of Rs. 69.5 billion between 2017 and 2022, during which time funds were illicitly transferred abroad rather than being used for legitimate trade.
The committee was alarmed to learn that 63 importer companies were involved in the over-invoicing scam. Concerns were raised over how these companies, many with minimal paid-up capital, managed billions of rupees in transactions. For example, one company with just Rs. 2 million in capital conducted trade worth Rs. 50 billion, while another with Rs. 10 million capital facilitated Rs. 40 billion in trade.
Further scrutiny revealed the involvement of commercial banks in facilitating these transactions. While the State Bank of Pakistan (SBP) imposed fines exceeding Rs. 200 million on the banks, the committee questioned the effectiveness of such minor penalties and demanded greater transparency about the SBP’s actions.
Funds from the over-invoicing scheme were transferred to multiple countries, including the UAE, Singapore, Switzerland, the US, Australia, Germany, Canada, South Korea, Sri Lanka, and the UK. The Financial Monitoring Unit (FMU) had flagged suspicious transactions as early as 2019, but only 28 Suspicious Transaction Reports (STRs) were sent to the FBR, which the Senate committee criticized for its delayed response.
Among the companies flagged were Bright Star, which conducted four transactions worth $185 million, and Moonlight, which carried out two transactions totaling $49 million. Overall, the reported value of over-invoicing and money laundering amounted to $427 million.
The committee vowed to continue the investigation and hold all those involved accountable for their role in this financial scandal.
