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 exacerbated by accountability gaps and low salaries. Despite some progress 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 is viewed as politically biased and underfunded, which hampers its effectiveness in combating corruption, while the legal framework exists but fails to prevent widespread corrupt practices.

Pakistan's economy is currently fragile, characterized by weak macroeconomic indicators and a heavy reliance on imports, which has led to challenges in attracting foreign direct investment (FDI). The country faced a near-default situation in June 2023, prompting an agreement with the IMF for a $3 billion Stand-By Arrangement to stabilize the economy, while ongoing issues such as high inflation, political uncertainty, and security concerns continue to hinder business operations.

Pakistan's investment climate is characterized by significant challenges, including high inflation, bureaucratic red tape, and security concerns, which deter foreign direct investment (FDI). The government has introduced the Special Investment Facilitation Council (SIFC) and a new Investment Policy in 2023 to attract FDI, particularly from Gulf Cooperation Council (GCC) countries, while also emphasizing the need for improved legal protections and consistent policies for foreign investors. Despite these efforts, the overall investment landscape remains difficult, with investors citing inconsistent regulations and inadequate intellectual property rights protection as major obstacles.