Pakistan Investigates Potential Tax Evasion And Money Laundering Via Bitcoin

On May 24, 2017, Pakistan’s Federal Board of Revenue (FBR) launched an investigation into potential tax evasion and money laundering conducted through bitcoin trading.

Khawaja Tanveer Ahmad, the FBR’s Director General (Intelligence Investigation – Inland Revenue), has been vested with prosecutorial powers in cases where tax-evaded money has been laundered.

In 2000, Pakistan joined the Asia/Pacific Group on Money Laundering, accepting the “requirement that members develop, pass and implement anti-money laundering and counter-terrorist financing legislation and other measures based on accepted international standards.” Under Pakistan’s Anti-Money Laundering Act, 2010, tax evasion is considered a predicate offense.

At present, the State Bank of Pakistan does not recognize cryptocurrencies, treating them instead as commodities.

In December 2016, the trading volume on the LocalBitcoins over-the-counter platform quadrupled for the Pakistani Rupee in a single week. Since then, trading volume has steadily trended upward. According to CoinDance, the trading volume of LocalBitcoins in Pakistan has more than doubled over the last two weeks.

As reported by DAWN, a senior tax official stated that the major traders of bitcoin are employed in a multinational telecommunications company in Islamabad. He also noted that traders maintain foreign bank accounts, and that there is a strong risk of tax evasion and money laundering by those dealing in cryptomarkets.