General Risk Factors of Pakistan for Money Laundering
Pakistan is one of the countries that have ongoing problems with money laundering. In addition, financial crimes such as drug and human traffic, corruption, financing terrorism are essential trouble for Pakistan. Pakistan has a defenseless and sensitive location for money laundering; they share the same geography with India, Iran, and China which are essential players in the drug market. Also, their location is on the critical drug and human trafficking route.
Also, according to Transparency International Corruption Index, Pakistan has 31st place from 0 to 100. According to World Governance Indicator, Pakistan has 21st place of Controlling of Corruption from 0 to 100. Location, corruption issues are increasing the risk of smuggling, fraud, kidnapping. The risks arising from the location and corruption show that Pakistan should pursue an effective policy against financial crime.
AML Regulations of Pakistan
Pakistan set a legal basis on financial crime by announcing an Anti-money Laundering Act in 2010. Thanks to the anti-money laundering act, which is applicable all over the country, Pakistan showed its enthusiasm in that field. The act is applicable for both individual persons and entities. If money laundering activities are detected, penalties vary between 1 to 10 years, and if a person is a legal person, the penalty may increase up to 100 million Pakistani Rupee.
Also, The National Accountability Ordinance of 1999, which requires reporting questionable and uncertain transfers by financial institutions to NAB, is significant.
Moreover, The Narcotic Substances Control Act of 1997 requires that suspicious transactions be reported to the ANF, confiscating and caveating money involved in drug trafficking
Pakistan is included in the Asia Pacific Group on Money Laundering (APG). One of the crucial targets of APG is adapting AML and CTF standards, which are stated in FATF-8/40 Lists. The primary targets of APG's are cooperating with countries in their region, taking measures for preventing financial crimes and money laundering. In addition, significant targets of APG are how to handle legal aspects of crime, forfeiture, and extradition while offering guidance about detecting and reporting suspicious transactions.
Responsible AML Bodies and Regulators
Several government bodies and regulators have responsibility for detecting, prosecuting financial crimes, and imposing requirements for institutions, such as
- National Accountability Bureau
- Federal Investigation Agency
- Directorate General Federal Board of Revenue
- Other Law enforcement agency
- The State Bank of Pakistan
- The Securities and Exchange Commission of Pakistan
- Federal Board of Revenue
- The ICAP
- The ICMAP
- Pakistan Bar Council and Other independent legal organs
- Limiting and restricting of businesses and products of individual or entity
- Revoking license and decertification or deregistering of entity or individual
- Imposing a permanent or temporary ban on a natural person, including paper-based warning
- Suspending, censuring, reprimanding
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