Pakistan’s Faceless Customs Assessment (FCA) system, introduced last year as a digital reform to curb corruption and enhance transparency in goods clearance, has come under sharp criticism after an internal audit revealed revenue losses amounting to Rs100 billion in just three months. The findings raise significant concerns about systemic vulnerabilities in the model that was intended to modernize the country’s customs operations.
According to a 161-page audit report covering the period between December 16, 2024, and March 15, 2025, Pakistan Customs reviewed 13,140 goods declarations (GDs). Of these, discrepancies were found in 2,530 GDs, exposing major risks to revenue collection and compliance. The report further highlighted that 18 percent of the GDs were cleared via the green channel, 76 percent through the red channel, and 6 percent through the yellow channel.
The audit identified duty and tax evasion worth Rs5 billion across 1,524 GDs, alongside statutory fines totaling Rs2.43 billion that were never collected. In addition, the clearance of restricted goods valued at Rs10.54 billion in 1,006 GDs raised alarms, with several cases linked to violations of intellectual property laws. The non-framing of contravention cases for GDs involving evasion of Rs1 million or more added to a potential loss of Rs30.364 billion.
Instances of fiscal fraud also emerged. The report cited examples of assessed or finalized GDs being cancelled to avoid duty payments, while 54 containers of solar panels were fraudulently cleared using unauthorized tax numbers, taking advantage of loopholes in the FCA system. Another case pointed to possible trade-based money laundering when a used Toyota Land Cruiser was imported at a declared value of Rs10 million, far below its actual cost.
Officials noted that the green channel under FCA, designed for expedited clearance, has expanded to cover nearly 60 percent of imports and 85 percent of exports. While intended to streamline trade, this facilitation has weakened pre-clearance checks and created room for exploitation. Misclassification of HS codes, undervaluation of goods, misuse of exemptions, and underpayment of sales tax were among the common discrepancies uncovered.
Post-clearance audits further showed that importers repeatedly filed GDs with misdeclarations to bypass duties and penalties. This pattern, the report said, indicates that systemic lapses allow for repeated exploitation of the digital platform without detection or corrective measures.
The audit also revealed that 28 GDs for solar panel imports processed between December 2024 and February 2025 were filed under unauthorized National Tax Numbers, despite some importers having a history of arrests in similar fraud cases. The recurrence of such issues points to deeper governance and compliance challenges within the customs framework.
The FCA system was launched with the promise of reducing human intervention, limiting corruption, and ensuring fair assessments. However, the latest findings suggest that without stronger monitoring mechanisms, the model has created new avenues for evasion and fraud. Experts argue that while automation is essential for efficiency, it must be supported by robust oversight, risk management, and accountability measures to prevent massive leakages in state revenue.
The revelation of a Rs100 billion shortfall in just three months underscores the urgency for the Federal Board of Revenue (FBR) and customs authorities to reassess the system’s safeguards. Unless structural reforms are introduced, Pakistan risks not only revenue losses but also further erosion of trust in its trade governance mechanisms.
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