AML, CFT: IMF urges Pakistan to step up efforts
In its first staff-level agreement, the IMF emphasized the need for immediate action to resolve issues facing undercapitalised financial institutions and called for enhanced vigilance across the financial sector. It noted that robust AML/CFT measures are essential to effectively counter risks related to money laundering and terrorist financing.
The report stated that the authorities' financial sector strategy should clearly identify and prepare for the implications of the mandated removal of 'Riba' (interest) from the economy by January 2028, following the 26th Constitutional amendment in October 2024, which would have significant implications for the structure of the financial sector, financial stability, banking supervision and monetary policy implementation.
Publication of this plan and all necessary guidance will help align the expectations of market participants, investors, and regulators, allow them time to prepare, and mitigate concerns about any possible cliff effect (proposed new SB, end-June 2026), it said.
The report further stated that the authorities should develop a strategic action plan to support further capital market development to address the sovereign-bank nexus and improve access to private sector financing.
Finally, AML/CFT effectiveness should be enhanced with respect to risk-based supervision, beneficial ownership transparency, and risk mitigation of trade-based money laundering, it said.
Pakistani authorities pledged to 'continue to strengthen the effectiveness of our system to combat money laundering and terrorist financing. The National AML/CFT Authority is an overarching body for implementation by the relevant competent authorities under the relevant laws with respect to AML/CFT/TFS.
The authority, inter alia, is coordinating the activities and monitoring the performance of relevant AML/CFT agencies, to address high risk offenses identified in the 2023 National Risk Assessment (such as corruption, smuggling, tax crimes and unlicensed hawala operators)'.
Pakistani authorities further stated that reforms are currently focusing on enhancing the effectiveness of AML/CFT supervision of designated non-financial businesses and professions and virtual asset service providers, and to prevent the misuse of entities for criminal purposes, improving the availability and accuracy of beneficial ownership information (including through risk-based verification by the Securities and Exchange Commission of Pakistan). To prevent risks from trade-based money laundering (TBML), the SBP updated in August 2024 its overall AML/CFT supervisory framework in assessing risks and plans to issue a new standalone supervisory framework on TBML by end-June 2025, it added.
Following the decision of the Supreme Court on the petition on the National Accountability Bureau (NAB) Ordinance, the authorities pledged that 'we will continue to enhance NAB's operational effectiveness and independence in investigating corruption cases above the PRs 500 million threshold and coordination with other investigative bodies such as the Federal Investigation Agency and Provincial Anti-Corruption Establishments (PACEs).
In line with the AML Act and the National Fiscal Pact, the relevant federal notification process initiated by the Financial Monitoring Unit (FMU) will be issued by end-December designating the PACEs to investigate money laundering related to corruption offenses within their jurisdiction, and to request and receive financial intelligence from the FMU as an investigating agency.'
The authorities also committed that State Bank of Pakistan (SBP), Federal Bureau of Revenue (FBR) and FMU will continue to support banks' access to asset declarations of high-level federal public officials (BPS17-22), which has helped banks comply with their AML/CFT obligations and better risk profile their customers who are politically exposed persons.
Copyright Business Recorder, 2025
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