FBR goes after bitcoin traders

Published May 25, 2017
Bitcoin is sometimes used for money laundering because of the decentralisation of peer-to-peer online transactions and their anonymity. No laws currently regulate the trade in bitcoin.—Reuters
Bitcoin is sometimes used for money laundering because of the decentralisation of peer-to-peer online transactions and their anonymity. No laws currently regulate the trade in bitcoin.—Reuters

ISLAMABAD: The top intelligence department of the Federal Board of Revenue (FBR) is investigating cases where investors trade digital currencies probably to evade taxes or launder money.

The State Bank of Pakistan (SBP) does not recognise cryptocurrencies, such as bitcoin. These digital currencies are also traded as commodities.

A senior tax official said people evade tax and launder money using cryptocurrencies. They buy bitcoin to launder their tax-evaded money, he said, adding that they park their black money out of Pakistan in many cases.

The anti-money laundering cell of the Directorate General of Intelligence and Investigation, Inland Revenue (I&I-IR) started investigating on Wednesday the financial affairs of people having huge investments in cryptocurrencies, including bitcoin.

Tax evasion is a predicate offence under Anti-Money Laundering Act 2010. The government has appointed the Directorate General of I&I-IR as investigating and prosecuting agency in cases where tax-evaded money is laundered.

According to the tax official, the trade of bitcoin is on the rise in Pakistan. The initial inquiry revealed that bitcoin is being traded mostly against cash in the country.

The current price of bitcoin is hovering around Rs200,000. Upon receipt of credible information, the Directorate General of I&I-IR undertook a search to trace the trade.

Summonses were served on major traders of bitcoin for further investigation. As per a report published online, the trade volume of bitcoin in Pakistan increased 400 per cent during December 2016 alone.

Bitcoin is sometimes used as a tool for money laundering due to the decentralisation of peer-to-peer online transactions and their anonymity. No laws currently regulate the trade in bitcoin.

According to the tax official, the inquiry showed major traders of bitcoin are employed in a multinational telecommunication company in Islamabad. They also maintain bank accounts in a few other countries.

However, they were not reporting their business activities to the tax authorities, which gave rise to the suspicion of money laundering.

The tax official said there is a high chance of tax evasion and money laundering in the trade of cryptocurrency.

Therefore, an in-depth probe is being carried out to gauge the actual quantum of bitcoin trading and scrutinise whether its income is being properly reported under the tax laws.

Published in Dawn, May 25th, 2017

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Defining extremism
Updated 18 Mar, 2024

Defining extremism

Redefining extremism may well be the first step to clamping down on advocacy for Palestine.
Climate in focus
18 Mar, 2024

Climate in focus

IN a welcome order by the Supreme Court, the new government has been tasked with providing a report on actions taken...
Growing rabies concern
18 Mar, 2024

Growing rabies concern

DOG-BITE is an old problem in Pakistan. Amid a surfeit of public health challenges, rabies now seems poised to ...
Provincial share
Updated 17 Mar, 2024

Provincial share

PPP has aptly advised Centre to worry about improving its tax collection rather than eying provinces’ share of tax revenues.
X-communication
17 Mar, 2024

X-communication

IT has now been a month since Pakistani authorities decided that the country must be cut off from one of the...
Stateless humanity
17 Mar, 2024

Stateless humanity

THE endless hostility between India and Pakistan has reduced prisoners to mere statistics. Although the two ...