IMF on Pakistan: The International Monetary Fund (IMF), in its latest governance assessment report, has warned that Pakistan continues facing severe risks of corruption-linked money laundering, with weak accountability systems and persistent political interference undermining investigations, due to the deeply entrenched corruption in both its political and legal sectors.

The findings – a part of the global money lender's Governance and Corruption Diagnostic Report – published on Nov 19, highlighted several lingering gaps across many high-risk sectors — including banking, real estate, construction, public procurement and activities involving politically exposed persons (PEPs).

The global body further noted that illicit funds are routinely hidden through shell companies, illegal transactions occur frequently through the routine misuse of its corporate structures, and informal transfer systems such as hawala, further complicating efforts to trace financial flows.

IMF Warning to Pakistan

The IMF also warned that constant judicial delays, drawn-out trial procedures and the very low conviction rates have greatly diluted the effectiveness of Pakistan's anti-money laundering (AML) regime.

Furthermore, its courts are greatly susceptible to external pressure from the public, or other third parties, which was particularly more so when concerning its high-profile and politically sensitive cases.

This persistent vulnerability to outside pressure, erodes the legal and judicial bodies of their independence, greatly adding to the public's mistrust and lack of confidence over its own domestic systems. [Also Know - The India–Canada Trade Pact Amid Repo Rate Cuts and Global Debt Stress: Promise or Peril?]

Coordination among oversight bodies is also greatly limited, and preventive controls are inconsistently, and scarcely applied, with the Fund cautioning that Pakistan's deeply entrenched corruption, political interference and institutional fragility continue to pose significant threats to its financial integrity and long-term economic stability.

Despite this, the body did acknowledge that Islamabad has taken some definitive measures for strengthening oversight in its financial sectors, by including targeted inspections of banks to ensure compliance with AML rules, particularly in screening PEPs and filing suspicious transaction reports.

Authorities told the IMF that more than PKRs 944 million (about USD 3.3m) in fines were issued to 17 banks in 2023–24 for AML-related violations.

The IMF also noted a shifting public landscape on matters of financial accountability, driven increasingly by its own changing demographic reality. An estimated 60 percent - if not more - of the country's 247 million population is under 30, more urbanised and digitally connected.

This youth-based social dynamic is noted to be far less tolerant for structural and institutional corruption, and demands greater national accountability — and is vocally active in voicing its demands.

However, this same dynamic is a double edged sword, as the nation's youth is also more extremist, radical, and quick to resort to the use of political violence and causing civil unrest for meeting its demands, reflecting both its deep-rooted frustration with the systematic political corruption and the deteriorating socio-political stability.

While it recognised and welcomed some of its noted regulatory improvements, the body nonetheless deemed them far from sufficient as legal investigation and enforcement remains inconsistent and slow.

The IMF reported that the National Accountability Bureau (NAB) often needs around four months to open a formal inquiry due to heavy administrative vetting, leading to many complaints being either put on the backburner for years, or never progressing at all.

Supervision is especially weak at the Federal Board of Revenue (FBR), responsible for monitoring thousands of Designated Non-Financial Businesses and Professions. Due to its limited manpower, the FBR struggles to conduct meaningful inspections or ensure compliance across the sector, aggravating grievances.

The IMF also highlighted a lack of transparency, noting that institutions generally do not publish detailed data on suspicious transactions, inspections, investigations or sanctions — reinforcing doubts about the fairness and effectiveness of the AML system.