Lahore High Court Says Money Laundering Probe Can Proceed During Tax Dispute
- The court ruled that an unresolved income tax case does not prevent a separate money laundering investigation.
- It upheld the authority of FBR’s Inland Revenue intelligence wing to register cases, investigate and prosecute under the Anti-Money Laundering Act.
- The court dismissed the petitions challenging FBR’s actions, leaving questions about the money and its movement to the relevant special courts.
The Lahore High Court has ruled that money laundering proceedings can move forward without waiting for a related income tax dispute to be finally decided. The court treated money laundering as a separate offence under the Anti-Money Laundering Act, 2010.
A two-judge bench comprising Justice Khalid Ishaq and Justice Hassan Nawaz Makhdoom dismissed Writ Petition No. 2928 of 2026 and connected petitions challenging the powers and actions of the Federal Board of Revenue’s Directorate General of Intelligence and Investigation, Inland Revenue (I&I-IR).
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The court held that I&I-IR has the legal authority to register first information reports, investigate suspected money laundering and pursue prosecutions. It also found that a previous conviction for the offence alleged to have generated the money is not required before a money laundering case can proceed.
The bench said an ongoing tax assessment or appeal cannot, by itself, halt proceedings under the Anti-Money Laundering Act. It distinguished a Supreme Court ruling in the Taj International case, saying that decision concerned sales tax assessment and recovery and did not bar a money laundering investigation.
The judgment also addressed reports of suspicious transactions sent by banks to the Financial Monitoring Unit. It said action arising from those reports must remain within the legal framework and its safeguards.
According to the court, a High Court writ petition generally cannot be used to stop a criminal investigation before it runs its course. Questions about the source of funds and how they were moved must be assessed on the evidence by the relevant special courts.
FBR welcomed the decision, saying it clarified the law governing money laundering investigations. The cases were pursued under the guidance of I&I-IR Director General Aqeel Ahmed Siddiqui.
