IMF Criticizes Pakistan’s Failure to Curb Money Laundering Effectively

ISLAMABAD: The International Monetary Fund (IMF) has observed that Pakistan is failing to effectively utilize beneficial ownership data of companies, hindering efforts to combat money laundering linked to corruption and preventing fake companies from securing government contracts.
In its draft “Governance and Corruption Diagnostic Assessment” report, the IMF highlighted serious shortcomings in the implementation of Pakistan’s beneficial ownership framework. The report noted a lack of structured coordination between the Securities and Exchange Commission of Pakistan (SECP) and investigative agencies for sharing and using beneficial ownership data in financial investigations.
While Pakistani authorities disagreed with the IMF’s assessment, stating that relevant agencies are using this data except in the case of designated non-financial businesses and professions (DNFBPs), the global lender stressed that the implementation still falls short of international standards.
Eight years ago, Pakistan tightened rules on beneficial ownership under the Financial Action Task Force (FATF) requirements. However, like many other reform areas, enforcement remains weak.
According to the IMF, regular data exchange among the SECP, State Bank of Pakistan, Federal Board of Revenue, commercial banks, money service providers, and law enforcement is essential for the effective use of beneficial ownership information in financial investigations.
The report recommends that Pakistan establish a multi-agency working group to review beneficial ownership data for anti-corruption investigations.
It noted that although the legal framework for beneficial ownership is crucial, weaknesses in enforcement, verification, legislation, and inter-agency access undermine its effectiveness.
Pakistani officials responded that the SECP has already granted direct access to its online beneficial ownership database to investigative bodies and that the Financial Monitoring Unit (FMU) is utilizing this data for analyzing suspicious transactions.
Since 2018, the SECP has required companies to collect information on their real owners, including full name, parent or spouse’s name, identification or passport number, nationality, country of origin, email address, residential address, dates of ownership registration and termination, and reasons for changes in ownership.
Despite these measures, the IMF highlighted critical gaps in enforcement, which continue to enable the misuse of illicit funds. The report stated that public funds embezzlement and unfair contracting practices can only be curbed by exposing fake companies.
Officials added that several state agencies are actively using the SECP’s online database, and the FMU is working to improve stakeholder access to data, enhance training, and facilitate inter-agency coordination for better implementation of anti-money laundering responsibilities.
They also noted progress in monitoring politically exposed persons (PEPs) and risk-based due diligence by financial institutions. However, the DNFBP sector still faces challenges in technical capacity, compliance culture, and supervisory oversight.