KARACHI: The Federal Board of Revenue (FBR) has decided to initiate legal proceedings against 463 importers, 106 clearing agents, and several officials from Pakistan Revenue Automation Limited (PRAL) and Pakistan Single Window (PSW) for tampering with over 2,300 customs declarations to evade Rs14 billion taxes.
The novel fraud scheme, which operated undetected for five years since January 2020, was exposed when a former PRAL officer facing corruption charges revealed the operation to a top intelligence agency. The so-called whistleblower implicated several associates who had moved from PRAL to PSW when the system transferred in 2022.
According to sources close to the investigation, the perpetrators exploited vulnerabilities in the Web-Based One Customs (WeBOC) and PSW systems to manipulate transshipment (TP) Goods Declarations (GDs). “Instead of properly converting these declarations to Home Consumption GDs at dry ports as required by law, the accused illicitly breached the system to falsify product classification codes, quantities, and values to evade customs duties,” they said.
“This is one of the most sophisticated attempts to defraud the customs system we’ve seen,” said a top customs official speaking on condition of anonymity.
“The failure to implement multilayer security protections created an environment where unscrupulous elements could exploit system weaknesses,” he added.
The fraud primarily targeted dry ports across Pakistan, with Peshawar accounting for the highest number of tampered GDs at 1,671, followed by Lahore with 522. Other affected locations included Sialkot, Islamabad, Quetta, Risalpur, and Multan.
“Despite the breach, a major financial catastrophe was narrowly averted thanks to the Customs Risk Management System (RMS), which system flagged 99.2% of the manipulated declarations for enhanced scrutiny, routing them through red and yellow channels for pre-clearance checks.
Only 19 declarations— a mere 0.8% belonging to multinationals and large manufacturers— passed through the green channel without detection, sources said.
A preliminary audit of 60 randomly selected GDs revealed the scope of the attempted fraud. Initially declared duties of Rs136 million had been falsely reduced to Rs99 million through system manipulation.
However, the RMS- triggered inspections led to the recovery of Rs351 million— more than double the original amount declared—saving the government Rs251 million on these sample cases, sources added.
Meanwhile, officials confirmed that the FBR has instructed its Directorate General of Post Clearance to conduct a comprehensive audit of all affected declarations to quantify the total revenue impact.
Replying to a question, they said that tampering with the system constitutes a punishable offence under multiple sections of the Customs Act 1990, including 155I, 155J, and 32A.
Sources close to the matter said that this case highlights significant systemic vulnerabilities in the PSW system, adding that when PSW took over the system from PRAL in 2022, instead of forming a new team to address existing bugs and enhance security, they retained the same PRAL officials, allowing the fraud to continue unabated.
“The authorities need to conduct a forensic audit of the entire system. This isn’t just about punishing those involved—it’s about identifying all potential revenue leakages since the system was implemented in 2015,” sources said.
