The Faceless Customs Assessment (FCA) system, launched by Prime Minister Shehbaz Sharif in Karachi last year to combat corruption, has caused a staggering Rs100 billion revenue loss in only three months. A Pakistan Customs audit revealed loopholes, compliance failures, and evidence of trade-based money laundering that continue to undermine tax collection.
The Pakistan Customs Audit, an internal wing of the Federal Board of Revenue (FBR), carried out a detailed review from December 16, 2024, to March 15, 2025. Its 161-page report revealed discrepancies in 2,530 of the 13,140 goods declarations (GDs) examined, pointing to poor assessment quality and serious compliance risks.
The audit looked at GDs cleared through the green channel (18 percent), red channel (76 percent), and yellow channel (6 percent). It highlighted weak monitoring, inefficiency of staff, under and over-invoicing, and widespread trade-based money laundering. In one case, solar panels imported in 2023 were cleared more than a year later, suggesting prior knowledge of the Faceless Customs Assessment system.
The review uncovered Rs5 billion in duty and tax evasion in 1,524 GDs, statutory fine losses of Rs2.43 billion, and clearance of restricted goods worth Rs10.54 billion in 1,006 GDs. Another Rs30.364 billion in fines was lost because contravention cases were not framed for evasions exceeding Rs1 million.
Fiscal Fraud and Uncollected Fines
Fiscal fraud was also reported in cancelled and refiled GDs, while fraudulent solar panel clearances were made using unauthorized tax numbers. According to the report, fines of Rs53.549 billion should have been imposed under SRO 499(I)/2009, but only Rs3.480 billion was actually collected in 308 cases.
One glaring case involved a used Toyota Land Cruiser worth Rs10 million being cleared for just Rs17,635, raising concerns of trade-based money laundering. Importers may have used illicit channels such as hawala or hundi to conceal real payments and bypass financial scrutiny.
The audit also flagged misclassification of HS codes, false valuation, misuse of concessions, and underpayment of sales tax. Post-clearance reviews showed that importers often refiled GDs after initial detection of evasion, eventually securing favorable reassessments at lower duty rates.
It also revealed that 54 solar panel containers belonging to five fake importers were cleared between December 2024 and February 2025 through unauthorized National Tax Numbers and Customs IDs. Some of these individuals had already been arrested in similar scams but continued operations by posing as low-income employees.
The report warned that nearly 60 percent of imports and 85 percent of exports now pass through the green channel, reducing pre-clearance checks. It concluded that the Faceless Customs Assessment system, designed to improve transparency, has instead become a high-risk area fueling revenue loss and compliance failures.