Pakistan continues to face ongoing challenges with money laundering. Moreover, the country grapples with various financial crimes, including drug and human trafficking, corruption, and the financing of terrorism. Pakistan’s vulnerable and sensitive geographic position compounds the issue of money laundering, as it shares borders with India, Iran, and China, all significant players in the drug market. Additionally, Pakistan is situated on crucial routes for drug and human trafficking.

Furthermore, Pakistan’s placement in rankings highlights the prevalence of corruption within the country. According to the Transparency International Corruption Index, Pakistan ranks 31st on a scale of 0 to 100. In the World Governance Indicators, Pakistan holds the 21st position in terms of controlling corruption on a scale of 0 to 100. The combination of location and corruption exacerbates the risks of smuggling, fraud, and kidnapping. These risks underscore the importance for Pakistan to adopt effective policies to combat financial crimes.

Pakistan took a significant step in combating financial crimes by enacting the Anti-Money Laundering Act in 2010, establishing a legal framework for addressing such offenses. This act demonstrates Pakistan’s commitment to tackling money laundering throughout the country. The legislation applies to both individuals and entities, and if money laundering activities are detected, penalties range from 1 to 10 years of imprisonment. In the case of legal entities, the penalty may increase up to 100 million Pakistani Rupees.

Additionally, the National Accountability Ordinance of 1999 plays a vital role by mandating financial institutions to report questionable and uncertain transfers to the National Accountability Bureau (NAB).

Furthermore, the Narcotic Substances Control Act of 1997 requires the reporting of suspicious transactions related to drug trafficking to the Anti-Narcotics Force (ANF), facilitating the confiscation and restriction of funds involved in such illicit activities.

Pakistan is a member of the Asia Pacific Group on Money Laundering (APG), which aims to align with the Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) standards outlined in the FATF-8/40 Lists. The primary objectives of the APG include cooperation among countries in the region, implementing measures to prevent financial crimes and money laundering. The APG also provides guidance on detecting and reporting suspicious transactions, while addressing the legal aspects of crime, asset forfeiture, and extradition.