Pakistan Country Summary

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 driven by inadequate accountability and enforcement. Despite some progress in court enforcement and government services, public perception of police and local government remains low due to widespread bribery. The country's judicial system is plagued by inefficiency and political interference, while various criminal activities, including human trafficking and drug trade, are exacerbated by corruption and the influence of organized crime.

Pakistan's economy is 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 but secured a $3 billion Stand-By Arrangement with the IMF to address its economic crisis, with fiscal stability and foreign investment being top priorities for the government.

Pakistan's investment climate is characterized by significant challenges, including complex regulations, inadequate intellectual property protections, and security concerns that undermine investor confidence. Despite these obstacles, the government has launched initiatives like the Special Investment Facilitation Council to attract foreign investment, particularly from Gulf Cooperation Council countries, and has introduced a new Investment Policy aimed at improving the investment landscape. However, ongoing political instability and macroeconomic uncertainty continue to hinder foreign direct investment.