Islamabad continues to grapple with widespread money laundering and terrorist financing concerns despite Pakistan’s removal from the Financial Action Task Force (FATF) grey list in 2022. What was initially seen as a positive step towards financial reforms now faces increasing scrutiny as recent reports highlight ongoing vulnerabilities.
According to a detailed report, FATF decided in 2025 to keep Pakistan under “follow-up monitoring” even after its exit from the grey list. This move reflects persistent doubts regarding Pakistan’s ability and willingness to effectively curb money laundering and terrorist financing activities. Experts note that removal from the grey list does not guarantee sustained compliance, especially in countries with deep-rooted structural weaknesses, informal economies, and illicit financial networks.
The FATF chairperson, Eliza D’Anda Madrazo, emphasized this concern clearly. She stated that coming off the grey list “is not an infallible shield against criminal activities.” Countries exiting the list remain under continuous review, and in Pakistan’s case, this monitoring is conducted by the Asia-Pacific Group (APG), since Pakistan is not a full FATF member. She stressed that no country is completely safe from money laundering or terrorist financing immediately after leaving the grey list.
The warning is not merely theoretical. Intelligence reports have revealed that Pakistan-based terrorist group Jaish-e-Mohammed used domestic digital payment platforms to raise approximately USD 14 million. These funds were allegedly used to establish over 300 new training camps across the country. This disclosure strengthens concerns that Pakistan’s financial system, particularly its digital and informal sectors, remains vulnerable to exploitation by extremist networks.
Concerns have also grown over Pakistan’s slow progress in regulating virtual assets (VA) and virtual asset service providers (VASPs). In June 2025, FATF expressed worries that Pakistan had neither imposed clear restrictions nor implemented effective oversight on the use of virtual assets. The global FATF report warned that regulatory failures in one country could have adverse international consequences. It also highlighted that terrorist financiers, drug traffickers, and state-backed actors are increasingly using stablecoins.
Beyond the digital realm, Pakistan’s vast informal economy continues to pose a serious challenge. The report notes that on March 12, 2025, Pakistan’s Federal Board of Revenue (FBR) identified more than 70 real estate agents allegedly involved in sending millions of dollars to the United Arab Emirates (UAE) through hawala and hundi networks.
These developments underline the ongoing challenges Pakistan faces in securing its financial systems against illicit activities despite official improvements and FATF’s grey list exit.
My name is Narendra Jijhontiya. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including TECHNOLOGY, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
Leave a Comment