IMF warns Pakistan of serious corruption-linked money laundering risks

New Delhi, Nov 22 The International Monetary Fund (IMF) has warned that Pakistan continues to face serious risks of corruption-related money laundering, with weak accountability and frequent political interference undermining investigations.

The assessment was published in the Governance and Corruption Diagnostic Report released by Pakistan’s Ministry of Finance on November 19.

According to the Tribune Express report, high-risk sectors include banking, real estate, construction, public procurement and activities involving politically exposed persons.

The IMF said corruption proceeds in Pakistan are often hidden through shell companies, misuse of corporate structures and informal money transfer systems.

It added that judicial delays, lengthy trials and low conviction rates further reduce the impact of anti-money laundering (AML) enforcement.

The IMF noted that corruption remains deeply rooted in the country, but changing demographics are reshaping public expectations.

More than 60 per cent of Pakistan’s 247 million people are under the age of 30, increasingly urban and active on social media. This younger population is less tolerant of corruption and more demanding of accountability and better public services.

The report said politicians are beginning to recognise the need to address corruption to meet these expectations.

The Fund acknowledged that Pakistan has taken steps to strengthen financial sector oversight, including targeted inspections of banks to ensure compliance with AML rules, particularly in onboarding politically exposed persons and generating suspicious transaction reports.

However, it emphasised that high-profile or politically sensitive cases still face external interference, reducing the independence of investigative agencies and weakening public trust.

The IMF report highlighted significant weaknesses in Pakistan’s enforcement system.

It pointed out that the National Accountability Bureau (NAB) takes around four months just to open a formal inquiry in corruption-related money laundering complaints due to extensive administrative vetting. Many complaints do not move forward at all, the report said.

The IMF also noted gaps in coordination among institutions, weak enforcement of preventive measures and poor follow-through in operational work.

While Pakistan informed the IMF that over Rs 944 million in monetary penalties were imposed on 17 banks during 2023–24 for violations linked to money laundering, the IMF said concerns remain about selective enforcement, especially when cases involve politically connected individuals.

The report added that the Federal Board of Revenue (FBR) struggles to effectively supervise Designated Non-Financial Businesses and Professions, mainly because of the large number of entities under its jurisdiction and the limited staff available for inspections.

The IMF said that key institutions do not publish detailed statistics on corruption-related suspicious transactions, inspections, investigations or sanctions, contributing to ongoing doubts about the fairness and transparency of Pakistan’s AML framework.

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