THE scam involving over-invoicing to the tune of more than Rs69bn in the import of solar panels raises many questions regarding the capacity, and willingness, of various links in the import chain — banks and customs authorities, as well as regulatory bodies — to detect and prevent trade-based money laundering as per their responsibility. It also underlines the presence of chinks in our AML/ CFT regime. It is astounding that no one in the chain saw that most companies involved in money laundering did not have the financial capacity to import solar panels on such a large scale. It is unacceptable that the fact that many of them were closely linked to one another and stolen identities were used to pull off the scam, went unnoticed. Astonishingly, the banks through which the payments were routed did not raise red flags on the abnormally large cash deposits by importers. Where they were raised, it is unclear if any action was initiated. It is also mind-boggling that the customs authorities could not see that the imported equipment had been invoiced at a highly inflated price.

It is now more than a year and a half since the scandal came to light and an investigation was launched. Yet new details keep emerging, thanks to a painstaking inquiry by a parliamentary panel. The inquiry undertaken by the panel is crucial not just to hold those involved in this fraud accountable but also to identify the gaps in the current AML/ CFT regime and its enforcement to prevent the recurrence of future scams. Not too long ago, Pakistan faced the threat of being declared a pariah by the FATF because of its weak AML/ CFT regime. It was after three years of immense effort and improvement in the framework that the global watchdog let Pakistan off the hook. It is, therefore, crucial that the inquiry by the parliamentary panel be fully supported by the authorities.

Published in Dawn, February 15th, 2025