Fake invoices and Hawala links: How Rs 1 crore Land Cruisers were cleared for PKR 17,000 in Pakistan's biggest customs scam

Visitors look at vintage cars at a classic car show in Peshawar on November 30, 2024. (Photo by Abdul MAJEED / AFP)

A staggering new audit report by Pakistan’s Directorate General of Customs Post Clearance Audit (PCA) has unearthed what is being termed the largest trade-based money laundering scam in the country’s history, this time centred around the import of luxury vehicles.

According to a 127-page audit report, importers evaded billions in customs duties by massively undervaluing high-end cars, often to absurd levels. In one particularly shocking case from 2023, a Toyota Land Cruiser with a real market value of over PKR 10 million was cleared through customs at a declared value of just PKR 17,635, allegedly with the collusion of corrupt customs officials.

The scheme, which involved 1,335 vehicles, is believed to have caused a tax loss of PKR 18.78 billion. The audit flagged “systemic under-invoicing in Pakistan’s faceless Customs system” and called into question the integrity of its digital assessment platforms.

“99.8% of all Land Cruisers imported to Pakistan were under-invoiced to evade taxes,” reported The Express Tribune, citing the PCA audit.

Pakistan lacks a robust automobile manufacturing base, forcing it to rely heavily on imports to meet domestic demand. This demand is most visible among the country's elites, who favour foreign-made vehicles like Toyota Land Cruisers, Mercedes-Benz, BMW, and Range Rovers as status symbols.

As per Dawn, in 2017 alone, 76,635 used vehicles were imported, accounting for 27% of the passenger car market. By FY21, imports of new and used vehicles made up about 20% of the market, compared to 80% for locally assembled kits.

This environment has become a hotbed for fraud. The PCA audit, conducted between December 2024 and March 2025, found that 99.8% of Land Cruisers imported in that period were under-invoiced. The total declared import value of the 1,335 cars was PKR 670 million, whereas their actual market value exceeded PKR 7.25 billion, leading to a shortfall in import duties and taxes of PKR 18.78 billion.

Digital loopholes, no proof of legal payments and Hawala links

Importers manipulated Pakistan’s faceless customs assessment system, a digital platform introduced to improve transparency and streamline clearances. However, the audit exposed that importers misused the system’s lack of oversight.

Critically, no importer provided legitimate evidence of overseas payments, heightening suspicions that hawala and hundi networks were used to finance these purchases. These informal money transfer systems are often associated with cross-border money laundering.

In another damning revelation, the report highlighted how importers misreported vehicle values not only at customs but also in their tax returns, evading income tax obligations alongside customs duties.

“One Land Cruiser alone, if taxed properly, should have generated PKR 4-4.5 million in duties,” the report stated.

Financial integrity at risk: Fallout begins

The massive scale of the scam has serious implications for Pakistan’s financial credibility, especially as the country is under continued scrutiny by the International Monetary Fund (IMF) and Financial Action Task Force (FATF).

The PCA audit report has now been forwarded to the Federal Board of Revenue (FBR), State Bank of Pakistan, and Financial Monitoring Unit (FMU). A broader investigation is already underway.

With Pakistan’s economy under stress and FATF compliance a constant concern, this scandal adds to fears of lax enforcement and the fragility of its financial systems, particularly in areas vulnerable to trade-based money laundering, tax fraud, and misuse of digital governance tools.