Financial Crime World

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Pakistan’s Regulatory Bodies Struggle to Combat Financial Crimes Amid Corruption and Location Challenges

Pakistan has long been plagued by issues related to money laundering, as well as financial crimes such as drug trafficking, human trafficking, corruption, and terrorism financing. The country’s strategic location, bordering India, Iran, and China, makes it a hotbed for illegal activities.

Challenges Ahead

According to Transparency International’s Corruption Index, Pakistan ranked 31st out of 100 in terms of corruption, while the World Governance Indicator placed it at 21st in controlling corruption.

Efforts to Combat Financial Crimes

Despite these challenges, Pakistan has taken steps to address financial crimes. The Financial Monitoring Unit (FMU) serves as the country’s designated Financial Intelligence Unit, responsible for collecting and reviewing Cash Transaction Reports (CTRs) and Suspicious Transaction Reports (STRs). FMU also informs investigative and supervisory authorities of pertinent financial information related to suspected proceeds of crime.

Multiple Government Bodies Involved

Multiple government bodies and regulators are tasked with detecting and prosecuting financial crimes, including:

  • National Accountability Bureau
  • Federal Investigation Agency
  • Directorate General Federal Board of Revenue
  • Other law enforcement agencies
  • State Bank of Pakistan
  • Securities and Exchange Commission of Pakistan
  • Federal Board of Revenue
  • ICAP
  • ICMAP
  • Pakistan Bar Council
  • Other independent legal organs

Laws Implemented to Combat Financial Crimes

Pakistan has implemented various laws to combat financial crimes, including:

  • Anti-Terrorism Act of 2002: defines offenses related to financing terrorism and money laundering
  • National Accountability Ordinance (1999): establishes specialized accountability courts and requires financial institutions to notify the National Accountability Bureau of suspicious transactions
  • Act to Control Narcotic Substances (1997): establishes specialized courts to deal with narcotics-related offenses

AML Ordinance and Anti-Money Laundering Act

In 2007, Pakistan introduced the AML Ordinance, which laid down comprehensive regulations for combating money laundering and terrorism financing. This ordinance criminalized money laundering and established FMU as Pakistan’s Financial Intelligence Unit. In 2010, the State Bank of Pakistan enacted the Anti-Money Laundering Act, replacing the 2007 AML Ordinance.

FATF Praised Pakistan’s Efforts

The Financial Action Task Force (FATF) has praised Pakistan for making significant improvements to its anti-money laundering and combating the financing of terrorism regime. As a result, Pakistan is no longer under FATF’s stricter monitoring regime and will continue to collaborate with APG to enhance its AML/CT system.

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