Pakistan

New Documents

The Asia/Pacific Group on Money Laundering released its second follow-up report on Pakistan’s progress with technically complying with the Financial Action Task Force Recommendations on implementing an anti-money laundering and counterterrorist financing framework.

The State Bank of Pakistan and the Securities Exchange Commission of Pakistan announced amendments made to the Terms of Reference concerning their Joint Task Force on Conglomerates, which aim to further strengthen anti-money laundering and counterterrorist financing supervisory cooperation.

News

Enforcement Actions

The State Bank of Pakistan’s Offsite Supervision and Enforcement Department issued a Rs59,516,000 penalty against the Karachi, Pakistan-based financial institution for violating instructions and regulation related to anti-money laundering and counterterrorist financing.

The State Bank of Pakistan’s Offsite Supervision and Enforcement Department issued a Rs12.8 million penalty against the Karachi, Pakistan-based financial institution for procedural violations of customer due diligence and know your customer requirements.


Important Facts

  • The U.S. State Department labels Pakistan a major money laundering country. Significant predicate money laundering crimes include corruption, tax evasion, fraud, trade in counterfeit goods, contraband smuggling, narcotics trafficking, human smuggling/trafficking, and terrorist financing. The black market, informal financial system, and permissive security environment in Pakistan generates significant amounts of money laundering and results in the transfer of illicit gains to overseas entities. Illicit financial transfers occur in both formal and informal financial systems, though in 2020, the COVID-19 pandemic resulted in increased use of formal banking channels. Informal activities giving rise to money laundering occur along the largely unregulated Pakistan-Afghanistan border given a lack of comprehensive regulatory oversight of the borders. Common money laundering vehicles include fraudulent trade invoicing, use of money services businesses, and bulk cash smuggling. Criminals are also known to exploit import/export firms, front businesses, and the charitable sector. Unlicensed hawala/hundi operators are also common throughout the broader region. In 2020, the country increased monetary penalties and prison sentences for anti-money laundering violations and passed 15 laws aimed at combating terrorist financing in an effort to address regulatory deficiencies identified by international experts. In 2020, the Pakistani government reported 101 convictions for terrorist financing violations and money laundering offenses.
-Source: 2021 International Narcotics Control Strategy Report (INCSR)

Rankings

FATF i | 2013 Methodology

Technical Effectiveness
Compliant : 7 High : 0
Largely Compliant : 24 Substantial : 0
Partially Compliant : 7 Moderate : 1
Non-Compliant : 2 Low : 10

A "graylisted" country as of Oct. 19, 2018. Pakistan's technical compliance was re-rated in a June 2, 2021 follow-up report

BASEL i

Rank : 28/141
Score : 6.3/10

TRANSPARENCY INTERNATIONAL i

Rank : 120/180
Score : 32/100

Tax Justice Network i

Rank : 100/133
Score : 55/100