Money laundering cases can proceed without awaiting tax cases: LHC

ISLAMABAD: The Lahore High Court has ruled that money laundering is a separate crime in its own right. The Federal Board of Revenue (FBR) does not have to wait for a person’s income tax case to be fully decided before it starts a money laundering investigation. The judgment was given by a two member bench of Mr. Justice Khalid Ishaq and Justice Hassan Nawaz Makhdoom in Writ Petition No. 2928 of 2026 and related cases. The petitions had challenged the powers and actions of FBR’s Directorate General of Intelligence & Investigation, Inland Revenue (I&I-IR). The Court dismissed all of them. The court observed that there was a fundamental distinction between proceedings for assessment, determination and recovery of tax under the Income Tax Ordinance and criminal proceedings under AMLA. “Merely because the facts giving rise to a criminal prosecution may simultaneously entail civil or fiscal consequences does not denude the conduct of its criminal character, ” the judgment stated. It means taking money earned through illegal means and moving it around so that it looks like clean, lawful income. In Pakistan, it is dealt with under the Anti Money Laundering Act, 2010. The Lahore High Court (LHC) has held that proceedings under the Anti-Money Laundering Act, 2010 (AMLA) can be initiated and continued without prior final determination of the corresponding tax liability under the Income Tax Ordinance, 2001. A two-member bench dismissed a batch of constitutional petitions challenging the jurisdiction of the Federal Board of Revenue (FBR) and its Directorate General Intelligence and Investigation Inland Revenue (DG I&I) to initiate money-laundering proceedings on the basis of alleged tax-related predicate offences. The judgment clarified that the AMLA constitutes a separate and self-contained statutory regime dealing with money laundering and proceeds of crime, and cannot be made dependent upon completion of fiscal proceedings under the Income Tax Ordinance, 2001. The petitions, including W. P. No. 2928 of 2026, were filed by taxpayers against proceedings initiated by DG I&I under AMLA. The petitioners had challenged the registration of FIRs and consequential notices and proceedings, arguing that their underlying tax liabilities had not first been determined through the adjudicatory mechanism provided under the Income Tax Ordinance. The FBR explained the judgement that the FBR’s I&I-IR wing has full legal authority to register cases (FIRs), investigate, and prosecute under this law. A money laundering case and a tax case are two different matters. One does not have to wait for the other to end. A person can be prosecuted for money laundering even if there has been no earlier conviction for the crime that produced the money. The Anti Money Laundering Act is a special law that takes priority over general laws. Ongoing tax disputes cannot be used to stop or delay it. The Supreme Court’s decision in the Taj International case was about sales tax assessment and recovery only. It cannot be used to block money laundering proceedings. When banks report suspicious transactions to the Financial Monitoring Unit (FMU), and action follows, this happens within the law and with proper safeguards. A writ petition in the High Court cannot normally be used to stop a criminal investigation in advance. Questions about where money came from and how it was moved will be decided by the relevant Special Courts. The FBR explained that if you declare your income and pay your taxes, this judgment changes nothing for you. It strengthens action against those who hide illegal money or try to make it look legitimate. All such action must still follow due process and the rule of law. FBR welcomed the judgment, saying it brings legal clarity and strengthens the fight against money laundering and financial crime. The case was pursued under the guidance of Aqeel Ahmed Siddiqui, Director General (I&I-IR) and new FBR Member Admin. Copyright Business Recorder, 2026

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