FATF status

Pakistan is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies.

Latest FATF Statement - 21 October 2022

The FATF welcomes Pakistan’s significant progress in improving its AML/CFT regime. Pakistan has strengthened the effectiveness of its AML/CFT regime and addressed technical deficiencies to meet the commitments of its action plans regarding strategic deficiencies that the FATF identified in June 2018 and June 2021, the latter of which was completed in advance of the deadlines, encompassing 34 action items in total. Pakistan is therefore no longer subject to the FATF’s increased monitoring process.

Pakistan will continue to work with APG to further improve its AML/CFT system.

European Commission list of countries with strategic deficiencies in their AML/CFT regimes

Pakistan is no longer on the EU Commission list of high risk countries.

Compliance with FATF Recommendations

The last Follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Pakistan was undertaken in 2022. According to that Evaluation, Pakistan was deemed Compliant for 9 and Largely Compliant for 29 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 0 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

Pakistan ranks 133 out of 180 countries on Transparency International’s 2023 Corruption Perceptions Index, highlighting significant corruption issues stemming from accountability gaps and low salaries. Although there have been improvements in court enforcement and government services, public perception of police and local government remains low due to the prevalence of bribery for public services. The National Accountability Bureau faces challenges such as insufficient funding and perceived political bias, which undermines its effectiveness in combating corruption across various sectors.

Pakistan's economy is fragile, characterized by weak macroeconomic indicators, high inflation, and a heavy reliance on imports, which complicates foreign direct investment (FDI) attraction. The government has prioritized fiscal stability and economic growth, recently securing a $3 billion Stand-By Arrangement with the IMF to address immediate financial challenges. Despite these efforts, persistent issues such as political uncertainty, corruption, and security concerns continue to hinder the business environment.

Pakistan's investment climate is characterized by significant challenges, including high inflation, bureaucratic red tape, and security concerns, which deter foreign direct investment (FDI). Despite these obstacles, the government has initiated reforms, such as the 2023 Investment Policy and the establishment of the Special Investment Facilitation Council (SIFC), aimed at attracting FDI, particularly from Gulf Cooperation Council countries. However, investors continue to call for improved legal protections and a more consistent regulatory environment to enhance their confidence in the market.