Counter Financing of Terrorism and Challenges for the government of Pakistan

Abstract

This article explores the challenges and mechanisms related to Countering the Financing of Terrorism and Anti Money Laundering CFT/AML in Pakistan. It also highlights the role of Federal Board of Revenue and other stakeholders in executing the National Risk Assessment (NRA). Moreover, it emphasis on Pakistan’s vulnerability to terror financing and money laundering  due to its porous borders, cash demanding economy, and weak regulatory supervision of Designated Non-Financial Businesses and Professions (DNFBPs) like real estate agents and jewellers. In this research the role of FBR is highlighted in particularly through the NRA process, which evaluates inherent threats and vulnerabilities in various financial and non-financial sectors.

This research finds out different challenges, weak coordination among different agencies, infrastructural inadequacy, and limited human resource which are the main hindrances in effective implementation CFT/AML. Moreover, the non availability of dedicated team in DNFBPs, complexities of risk assessment process and data access is also the challenges. Although in 2022 Pakistan was on the high risk but despite of these challenges it meets the Financial Action Task Force (FATF) demands by ensuring stringent measures.

This study articulates that Pakistan’s regulatory framework has considerably evolved. However, allocation of resources, improvement in enforcement mechanism and international cooperation are vital factors for positive outcome. The finding give actionable recommendations to increase public awareness, fortify legal framework, advance regional and international cooperation to tone down money laundering and terrorism financing risks effectively. By addressing these areas, Pakistan can bolster its financial security and compliance with global AML/CFT standards, ensuring a more resilient economic system.