Daily Times

In order to meet the requirements of the Financial Action Task Force (FATF), the government has unilaterally registered all tax returns-filing real estate dealers as Designated Non-Financial Business and Professions (DNFBPs) and directed them to provide full details of their clients and property transactions after completing customer due diligence.

More than 20,000 real estate brokers, who are tax filers and have now been designated as DNFBPs, have also been given a four-page questionnaire containing 86 questions to submit online within seven days. “In case of non-compliance or partial compliance, action as per law will be initiated,” said notices sent to all real estate and property dealers. This comes at a time when the prime minister’s construction package and related amnesty scheme remains in place until June 30 under which the government has promised that sources of income for investments would not be asked.

Under SRO 924, the Federal Board of Revenue (FBR) has designated various professional entities as DNFBPs to meet the anti-money laundering and counter-financing of terrorism (AML/CFT) requirements of FATF. The brokers are now required to provide details of client relationship and services and report transactions of high-risk clients, local and foreign politically exposed persons and high net worth individuals, including non-resident clients, particularly those from countries or areas of concern.

They are also required to report if they have face to face or otherwise interactions with clients, types of payments for property transactions along with risk assessment of such clients and transactions and ensure risk mitigating controls and whether or not the procedures had been completed to fulfil the FBR and AML regulations.

Interestingly, the brokers have also been asked to identify clients and report the number of transactions related to “high-risk countries or areas of concern or the border areas of Khyber Pakhtunkhwa and Balochistan as well as South Punjab” as to ‘what was the value of those transactions” in rupees.

The brokers have been asked if potential clients had been rejected of existing clients closed due to high-risk factors and if they had enhanced their customers. They are also required to issue suspicious transaction reports (STRs) and currency transaction reports (CTRs) relating to entities and individuals to the Financial Monitoring Unit (FMU) regarding targeted entities for financial sanctions, particularly those under the UN Security Council’s targeted financial sanctions lists for proliferation financing under resolutions 1718 and 2231.

Under the Anti-Money Laundering Act (AMLA), the FBR is responsible for ensuring that DNFBPs, including real estate agents, dealers in precious metals and stones, and FBR-supervised accountants comply with the AML/CFT obligations. Financial institutions, lawyers, law firms, notaries and non-FBR-supervised accountants are supervised by other competent authorities and self-regulatory bodies.

The AMLA-required obligations apply to DNFBPs, including lawyers and law firms, notaries, other legal professionals, accountants and accounting firms, when they provide certain services to client, real estate agents, including brokers and dealers, builders and developers and housing authorities, as well as dealers in precious metals and stones, including jewellers, when they conduct cash transactions of over two million rupees.