KARACHI: Pakistan wants local real estate enterprises to voluntarily register themselves as designated non-financial businesses and professions (DNFBP) “within the next couple of days” to fulfil one of the key compliance conditions of the Financial Action Task Force (FATF), realtors and officials confirmed while talking to Arab News on Thursday.
The international financial watchdog asked Pakistan in June to continue its efforts to address the strategic deficiencies in its financial system that could be exploited by criminals who wanted to launder money or fund terrorist activities.
The international organization also wanted the country to demonstrate its ability to monitor the DNFBPs that do not belong to the financial sector of the country but can help individuals or entities conceal their criminal revenues.
According to the FATF, such businesses include casinos, trusts, individuals and companies dealing in precious metals and stones and real estate firms etc.
“Realtors are expected to start voluntarily registering themselves with the Designated Non-Financial Businesses and Professions Directorate at the Federal Board of Revenue [FBR] within the next couple of days,” Muhammad Ahsan Malik, general secretary of the Real Estate Consultants Association, told Arab News.
“Earlier, there was no clarity on what we were required to provide the authorities,” he continued. “Now the responsibilities of realtors have been defined and we know the record we need to maintain.”
Last month, Pakistan took measures to register property dealers, developers and builders to counter money laundering and terror financing that could take place through property transactions. These steps also included the establishment of a separate directorate at the FBR.
“The FBR has been made the regulatory authority for which a separate directorate general has been instituted,” Syed Nadeem Hussain Rizvi, an FBR spokesperson, told Arab News. “Its basic purpose is regulation, and it has nothing to do with tax issues.”
He informed that realtors were initially reluctant to register with the directorate since they feared the mechanism would deter buyers and sellers who might not want to share their details with the tax agency.
“The process has just begun and will be reviewed by the FATF,” he added.
The new mechanism is devised to help realtors identify the names of 4,500 proscribed individuals involved in money laundering and terror financing who are on a list prepared by the United Nations. The system will generate Suspicious Transaction Report (STR) if the names of these people emerged during a transaction.
Pakistan’s real estate developers said they understood that registration was now an international requirement.
“As developers, we don’t have any other choice but to follow the requirement,” Muhammad Hassan Bakshi, member of the prime minister’s taskforce on housing and former chairman of the Association of Builders and Developers of Pakistan, told Arab News.
Pakistan was placed on the FATF grey list of countries in 2018 due to its weak financial system.
Analysts say the country has technically completed most of the requirements imposed by the international financial watchdog, though they also believe any decision to remove its name from the grey list can be influenced by political considerations.
“Pakistan has completed its technical regulations and is now over-regulated,” Dr. Vaqar Ahmed, joint executive director at the Sustainable Development Policy Institute, told Arab News. “In the upcoming [FATF] meeting, the Afghan situation will surely come up for discussion and Pakistan will be viewed through the Afghan lens. Any decision regarding the grey list is therefore likely to be purely political.”