ISLAMABAD: On the intervention of the National Coordination Committee (NCC) on Financial Action Task Force (FATF) to meet international compliance, the Federal Board of Revenue (FBR) has clearly defined the reporting requirements for real estate sector players including brokers, developers and builders recently registered as Designated Non-Financial Business and Professions (DNFBPs).

The process has been simplified to facilitate about 22,000 registered DNFBPs of real estate sector who were finding hard to complete a four-page data sheet covering over four dozen questions about sellers and purchasers of property. This was a key hitch to the completion of only outstanding point out of a total 27-point action plan. The updated mechanism would be shared with the FATF by this weekend.

Following a series of consultations, the NCC agreed on Aug 17 to the demands and brought down the reporting requirements to four practical standards acceptable to DNFBPs. Under the decision, the FBR has now defined the reporting and documentation requirements, role, and functions of these DNFBPs.

Talking to media on Monday, Muhammad Ahsan Malik, Vice-President (Punjab) Federation of Realtors (FOR) and General-Secretary of Real Estate Consultants Association (RECA) of the twin cities, said the director-general DNFBPs has issued instructions to all relevant departments that they should deal with only registered DNFBPs. This will ensure that over 500,000 property dealers and developers etc would either have to register themselves as DNFBPs or work under the umbrella of already registered DNFBPs.

Updated mechanism to be shared with the FATF

The law has not been amended to comply with the FATF requirements, but relevant rules have been simplified to relax certain unnecessary conditions for the customer’s due diligence by DNFBPs. The FBR portal would be uploaded with the specified requirements for the developers and builders registered as the DNFBPs.

Now, the registered developers and builders are in a position to comply with the laid down rules and regulations without any confusion. First, each developer and builder will have to check the buyer and seller name from the list of the United Nations containing names of 4,500 proscribed persons.

If the name of the buyer or seller is not on the list, there is no issue for carrying out transactions. However, if any of the names are found in the UN list, the developer and builder has to immediately report it through a mobile app to the authorities concerned under the director-general DNFBPs.

Secondly, the developer and builder would be required to keep the copies of the sale and purchase agreement and the CNICs of the sellers and buyers.

Third, the customer’s due diligence is also a requirement for the builders and developers registered as the DNFBP. The buyer and seller would also submit a form about the actual beneficial owner of the property. If anyone is purchasing property on behalf of someone else, the actual beneficial owner must be declared through a form to provide complete money trail.

Fourth, Cash Transaction Report is also a requirement to be submitted by the developer and builder. At present, the property dealer or developer is bound to submit the cash transaction report of Rs2 million and above. Majority of the property transactions are being carried out on the FBR value or DC rates.

The payment would be required to be made through the purchasers bank account pertaining to the declared value of the FBR value or DC rate of the property as the case may be. The money trail must be available for the purchase of the immovable properties.

Under the law, the developer and builder is also required to maintain records for a period of five years, Mr Malik stated.

The questionnaire for the developers/builders and jewellers are the same and it is difficult to suddenly show compliance with all kinds of laws, conditions and legal requirements. The legal requirements of the DNFBP should be fulfilled by the transferring/registration authorities/societies, ie, the CDA, the LDA, the KDA, Bahria Town, DHAs, and revenue authorities etc, and not by the individual real estate agents, he added.

Out of 500,000 property dealers working across the country, the FBR has registered 22,000 as DNFBPs, who are filers of income tax returns.

The non-filers property dealers would be focused by the directorate-general of DNFBPs.

The ultimate objective is that only registered dealers and developers can do business in the market. The record keeping by the developers and builders has been clarified and defined. Now, there is clarity among the dealers about the rules and regulations, he added.

Published in Dawn, August 31st, 2021